As the market pulls back, we are looking for stocks that are resisting the selling pressure and exhibiting the best relative strength. Alphabet (NASDAQ:GOOGL) gapped higher following a well-received earnings report and is consolidating.
Alphabet: Provides online search, internet content services, and web-based advertising to cite their main businesses.
Group: Internet Content group is in a stage 2 uptrend.
Pattern Description: A Cup and Handle style pattern with a pullback/consolidation post earnings. This example has a high handle that is pulling back on top of its prior base. Note the volume dry up in the high handle.
Risk Management/Trigger: I am looking for the QQQ to find support around the 50sma to help with the timing of this trade. The idea is to buy a breakout of the diagonal on the GOOG chart combined with the breakout in a horizontal type of pivot, at least taking out a prior daily high. This could take days, or it could fail prior to a break invalidating this setup. My stop loss would be below the pivot/swing low of 127.85.
Leif Soreide is a former US Investing Championship winner, MBA in finance, entrepreneur, and founder of https://www.championteamtrading.com.
For educational purposes only.
