Thursday, July 13, 2017

GOOGL Alphabet (Google) Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Multi-Year Top in Play Going Forward

Negative divergence is setting up for Google as shown by the red lines. The MACD line, however remains long and strong wanting to see another higher high in price after a pull back occurs on this monthly basis. When price comes back up, the MACD line should go neggie d joining the other indicators and a  multi-year top in Alphabet will likely print. Thus, price may move down, up, then down or down, up, down, up, then down and roll over, on a monthly basis. Thus, a multi-year top would be expected to print for GOOGL say in the August to November time frame.

If you have enjoyed big profits on Google, it is likely prudent to start implementing an exit strategy. The red lines show the rising wedge in play over the last 4 years which is a very bearish pattern. The collapses from rising wedges can be quite dramatic. The red lines for the indicators show universal negative divergence occurring wanting to see a spank down sans the MACD as mentioned. GOOGL will likely pull back lower for a month or so, then move higher for another higher high in price and then, if the MACD line is negatively diverging, the multi-year top is in.

GOOGL has violated the upper standard deviation band (pink) so the middle band at 813 is on the table for starters and even the lower band at 664 as the long-term plays out. Price is above its moving average ribbon requiring a mean reversion lower. The RSI and stoch's are overbot agreeable to a pull back in price.

The ADX line exhibits a strong trend for the rise in price over the last five years. The GOOGL bears will not be happy until the ADX slips under that 30-31 level. When the top is placed and price begins rolling over to the downside the ADX will drop and indicate the strong uptrend is over. For now, the uptrend remains strong, and along with the long and strong MACD will help print another higher high in price say a month or two out.

Keystone was amazed that a lot of you millennials hold Google stock. All you under 30-year old's own a disproportionally large amount of shares in the top tech companies such as AAPL, NFLX, AMZN, FB, GOOGL and even TSLA. Setting Tesla aside, the charts of the other bigwig tech stocks, that have driven the broad stock indexes higher the last few years, are similar to GOOGL.

NFLX, AAPL and GOOGL will likely top out with a multi-year top and begin rolling over say, anytime now through October. AAPL has likely printed its multi-year top and is expected to roll over to the downside first going forward. NFLX should then follow Apple lower. Google should then follow Netflix lower. These three will likely roll over first and then followed by FB and AMZN a month or two later (say August-November multi-year tops). If you are young and your chest is puffed out since you have made a lot of money on Apple, Netflix and Google, it is likely wise to cash-out. That goes for any of these hotshot stocks. It is important to likely exit Apple and Netflix without hesitation now. You have a little more time with Alphabet since it may not place its multi-year top until the August-October time frame. Then Facebook and Amazon will roll over following AAPL, NFLX and GOOGL. It will be a wild second half of the year ahead.

You can always scale out of positions by selling, in the case of AAPL and NFLX, one-third of the position today, one-third in two or three weeks, and then the final third in about six weeks. You can scale out of GOOGL by selling say one-third today, one-third in August and one-third in September. Let that money sit in cash for a while since it is likely more important to be out of the market rather than invested on the long side.

Keystone does not own any position in AAPL, NFLX or GOOGL currently but both Apple and NFLX are setting up as potential attractive shorts. The shorter term charts can be used to gauge a good entry on the short side. Obviously, if the above stocks place multi-year tops and roll over in the weeks and months ahead as explained, the broad stock market will as well. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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