The A-to-Z on Alphabet (GOOGL) (July 24, 2017)
GOOGL GOOG GOOGL
Just a real quick one on Google ( NASDAQ:GOOGL ) because I had some comments. First of all, right now Google ( NASDAQ:GOOGL ) reported earnings. You can see what has happened to the stock, it is trading right around 966.00. We look at the daily chart and if we look at this high here, this intraday high, right up at about 1010.00, down here at 920.00. That is about 90 points. Now, if we take 90 points, divide it by 2, I don’t even need to use a calculator, that is 45 points. We drag this thing down 45 points and what do we get? We get about a little over $960.00. So what I am saying is, that halfway between the top and the bottom is $960.00. My bet is, that is about where Google ( NASDAQ:GOOGL ) will find support at tomorrow.
This little green dashed line here is the 30-day moving average of the VWOP, the volume-weighted average price. This is really where all of the trading has taken place. You get this huge amount of volume today. Everybody taking their positions prior to earnings, and then Google ( NASDAQ:GOOGL ) reports, and now the stock does what it does. Here is the thing: If I am you and I am wanting to buy Google ( NASDAQ:GOOGL ), and I am not, because I don’t. But if I am wanting to buy Google ( NASDAQ:GOOGL ) I am going to try and buy it as close to $960.00 as I can. Of course I am going to look at $920.00, which is a little bit less than 5 percent or so, as my downside.
Here is why I wouldn’t buy Google ( NASDAQ:GOOGL ) here. If we look at the weekly chart you can see what has happened here. The stock has just been on a tear. Institutions live by the sword, die by the sword. What we want is, we want to own stocks that have institutional sponsorship. And what I mean by sponsorship is, institutions buy the shares and they keep them. They are not trading them, they keep them. They have essentially bought the company by buying shares and keeping them. People like you and me, we are, for the most part traders. We don’t sponsor a stock. We buy low, sell high, basically. That is what we do. We rent it. I am not investing in the company, I am buying a stock that I think is going to go higher. Folks at these big hedge funds, mutual funds, whatever, active money managers, large money managers, they are not doing that. They are buying a stock and they are holding it, and they are holding it, and they are holding it for a long period of time; even through all this. That is sponsorship. And then the other side of sponsorship is, institutions buying.
Now, I guarantee you there is not one big money manager at $1000.00 who is saying, “Hey! I have a good idea. Have you heard of Alphabet? It is only $1000.00. Hey! Lets go buy Alphabet. Did you know they used to be Google?” The point is, this is not a secret. This is a stock where there are a lot of folks that are, shall we just say, are clustered around the exit sign.
What I am telling you is, at some point everybody knows about this company, everybody has heard about this company, “Oh, they are growing so fast and this and that.” Well, maybe so, but that is not what this stock is telling you right now after hours. I don’t know if it will get upgrades or downgrades, doesn’t really matter to me. What matters to me is, the market is not excited about the earnings that they reported. And so what you want to be asking yourself is this, sorry to be a bummer on all of you ‘Gogglonians’ but what you have to ask yourself is this, I have money, it is green. I can put those greenbacks to work in any stock that I want to. Do I want to buy GOOGL ( NASDAQ:GOOGL )? Or, GOOG ( NASDAQ:GOOG )? Take your pick. Do I want to put my money, do I want to exchange my money for this particular stock?
What I am telling you is, the only reason you will want to do the, there is actually two of them, one is a lack of imagination, you have no other play. You have nothing else that you can think about, in which case I would say we need to really work on that a bit. The other one would be, you have made so much money on Google ( NASDAQ:GOOGL ) in the past that you just want to get that feeling again. Or of course the third way would be, well you bought up here and so you are darn sure not going to sell this for a loss. But as soon as it gets back up to where you bought it from you would be happy to sell it. And that may be your best play, right there.
The bottom line is, if you are trading oversold bounces I don’t even think you can make that trade on Google ( NASDAQ:GOOGL ) because it is just down 4 percent, which isn’t enough for me to buy a $965.00 stock and see if it will go up to $980.00. Sorry to be a downer on Google ( NASDAQ:GOOGL ). By the way, note that I have not even mentioned what the earnings are, what the growth prospects are, or any of that other stuff. I don’t care about that. What I care about is institutional sponsorship, and the fact that there has been a lot of it. I just don’t see that many more institutional money managers looking at this saying, “Wow! I have got to buy Google on this dip.”
Free Chart