Can This Tech Giant Hold Support?

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Big Tech has seen its share of volatility in the last week. Now as the waves of panic recede, a value opportunity may have washed up on the beach.

Take a look at Alphabet (GOOGL). The Internet giant has dropped more than 6 percent from its late-August peak, hammered by political worries and a selloff in other high-profile names like Facebook (FB) and Twitter (TWTR). But now some technical patterns suggest it could bounce. They’re especially visible thanks to indicators on TradeStation’s award-winning platform.

The chart below shows “inside days” with yellow dots and “outside days” with purple dots. An inside day means that a stock remained completely inside the previous session’s range, with a higher low and lower high. An outside day is just the opposite.

Both are potential reversal signals. Did you know that GOOGL had one each of the last five days? First two inside days, an outside day, and then two more inside days.

Alphabet (GOOGL) chart with levels. Inset should inside/outside days.

But that’s not all. The consolidation is happening at the same $1,180-1,185 zone where the stock peaked several times this year. That could mean old resistance has become support.

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Implied volatility, a gauge of fear and pessimism, has also remained elevated above historical norms. Is too much negativity is priced in?

In conclusion, this isn’t a trade recommendation and everyone needs to do their own homework. But chart patterns suggest a blue-chip tech giant may be oversold.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.