4 Trade Ideas for Alphabet: Bonus Idea

• Posted by Greg Harmon
• on December 9th, 2019

Here is your Bonus Idea with links to the full Top Ten:

Alphabet, $GOOGL, started a move higher in December 2018. That ran to a top in April this year. It gapped down from there and continued lower, retracing over 78.6% of the move up before finding support. It reversed from there and in July gapped up to a slightly lower high. The pullback from there filled the July gap and the reversed back higher. It continued until breaking over the prior high and then consolidated. Friday it broke that consolidation to the upside and pressed through a 113% extension of the prior leg up.

The RSI reset during the consolidation and is now moving higher in the bullish zone with the MACD turning to cross up and positive. The Bollinger Bands® have just opened with the Friday move as well. There is no resistance above. Support lower comes at 1297 and 1278 before 1247 and 1216 then 1200. The stock does not pay a dividend. The company is expected to report earnings next on February 3rd.

Open interest in the December options is biggest at 1250 and 1300 on the put side with size at 1260 and 1280 as well. On the call side it is biggest at 1200 and 1300 then 1350. In January the 1400 call has the biggest open interest by far followed by the 1300 call. The put side is much smaller but biggest at 1200. The February options are the first to cover the next earnings report. Open interest is just building there but is biggest early at the 1375 call followed by the 1320 and 1300 calls.

Alphabet, Ticker: $GOOGL

Trade Idea 1: Buy the stock on a move over 1340 with a stop at 1315.

Trade Idea 2: Buy the stock on a move over 1340 and add a January 1330/1280 Put Spread ($15.20) while selling the February 1440 Call ($15.50) to pay for it.

Trade Idea 3: Buy the December/February 1350 Call Calendar ($27.60) while selling the January 1280 Put ($11.10).

Trade Idea 4: Buy the February 1250/1350/1400 Call Spread Risk Reversal ($2.70).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the first week of December in the books, sees equity markets showed resilience with a rebound from an ugly start.

Elsewhere look for Gold to continue its pullback while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the upside while US Treasuries pullback in their uptrend. The Shanghai Composite looks to continue the slow drift lower while Emerging Markets consolidate under long term resistance.

Volatility looks to remain low but off of the extreme lows keeping the bias to the upside for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ both rebounded to end back near all-time highs. But it is the IWM stealing the show as it looks to take over leadership with a break above 11 month resistance. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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