Alphabet shares failed in the last two attempts to break past the $780 barrier, leading to another test of support around $700. A double top formation can be seen on the daily time frame, with a strong break below the neckline around $660 likely to confirm that a long-term selloff is in order.
The 100 SMA is above the 200 SMA for now so the path of least resistance is still to the downside. However, the gap between the moving averages is narrowing so a downward crossover might be imminent.
Stochastic has been indicating oversold conditions for quite some time so sellers must be feeling tired. If buyers take over, price could continue to find support around the current levels and the dynamic 200 SMA inflection point and bounce back to the highs at $780. RSI is already on the move up from the oversold zone so a return in bullish pressure is taking place.
Reports that major stockholders are liquidating their Alphabet shares led to speculations of insider trading. Sergey Brin sold 33,332 shares of the firm’s stock in a transaction on Tuesday at an average price of $702.70, for a total transaction of $23,422,396.40. On Monday, he also sold 33,332 shares of Alphabet shares at an average price of $703.13, for a total transaction of $23,436,729.16.
Recall that the company recently reported $7.50 earnings per share last week, missing analysts’ expectations at $7.96. The firm earned $20.26 billion during the quarter, compared to the consensus estimate of $20.37 billion with revenue up 17.4% compared to the same quarter a year ago.
Still, several analysts maintain that the company’s fundamentals remain strong as ever and that the recent dips could simply offer opportunities to get in at better prices. After all, Google has pretty diversified operations and could stand to see stronger returns on their other investments later on.
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