It has been a difficult year for tech investors.
One of the megacap tech stocks and a member of the heralded FAANG group, Alphabet has struggled to weather the 2022 bear market.
The Google parent’s move hasn’t been like the worst of the growth stocks; some have seen declines of 60% to 70% or more. But Alphabet stock has suffered its worst decline in a dozen years.
So far, the stock has suffered a peak-to-trough decline of 45%.
For a company that has solid growth, a reasonable valuation, robust balance sheet and valuable assets like Google.com and YouTube.com, this type of decline doesn’t come around all that often.
Trading Alphabet Stock
Alphabet’s business is a bit more susceptible to the global economy than Microsoft is. As businesses come under pressure, they cut marketing budgets, which includes digital-ad spending.
When we look at the weekly chart above, note how the monthly VWAP measure went from support and turned into resistance. The same observation can be said for the $100 to $105 area.
Alphabet stock is now filling the gap at $89.44 as investors fret about whether the shares will retest the 52-week low at $83.34.
With the gap filled and Alphabet stock treading water around the $90 breakout level, the bulls are hopeful that the shares will find support.
At the same time, the stock is below all its daily and weekly moving averages and is susceptible to more losses. That’s particularly true amid a hawkish interest-rate stance from the Federal Reserve and as selling pressure persists in the broader market.
From a trading mindset, keep it simple.
If Alphabet stock breaks below $86.50, the lows could be back in play. Below $83 and it opens the door down to the $72 to $76.50 area. That area marks the 78.6% retracement and the pre-covid highs.
On the upside, keep an eye on $90. Above $90 puts the 10-week and 200-week moving averages back in play near $95, followed by the key $100 to $105 area.
If Alphabet stock can clear that zone, it may finally snap out of this downtrend — at least in the intermediate term.
Investors likely have a less technical approach to the stock. My thought is that Alphabet is a fantastic long-term company going through short-term headwinds.
When it’s down 40% to 50%, it’s better to look at it as a long-term buy than a long-term sell. That doesn’t have to mean all-in, but it can be accumulated in chunks until the technicals improve.