close icon

Alphabet Stock To $1700 and… Below?

Similarly to the market at large, Alphabet stock felt the tremors caused by the coronavirus panic. The Google parent’s share price fell from $1531 to $1009 between February 19th and March 23rd. One of the biggest and strongest companies in the world lost 34% of its value in a little over a month.

However, thanks mostly to the Fed’s actions, the market rebounded just as quickly. The S&P 500 and the DJIA are both up by over 34% from the March lows. Alphabet’s recovery has been even stronger with the stock up 39.4% in the past two months.

This brings one question to mind: how high can the stock go from here? Let’s take a look at GOOGL’s weekly chart and see if the Elliott Wave principle can help us find the answer.

Alphabet stock to complete a major Elliott Wave pattern

The chart reveals the stock’s entire progress since the company went public in 2004. The structure of the rally looks like an almost complete five-wave impulse pattern. It is labeled I-II-III-IV-V, where wave V is still in progress as of this writing.

Four smaller degrees of the trend are visible within the structure of wave III. First, wave III is labeled (1)-(2)-(3)-(4)-(5). Then, the sub-waves of wave (3) are marked as 1-2-3-4-5. Going further into the details, we see that wave 3 consists of another impulse, labeled (i)-(ii)-(iii)-(iv)-(v). And finally, there is a clear i-ii-iii-iv-v in wave (iii).

Not Much Left of Alphabet ‘s post-IPO Uptrend

The coronavirus selloff fits in the position of wave IV. It is interesting to notice that wave IV appears to have ended precisely at the 38.2% Fibonacci level, where fourth waves usually terminate. This brings us to wave V, which can be expected to reach a new all-time high.

If this count is correct, Alphabet can keep marching on towards roughly $1700 a share. The problem is that according to the Elliott Wave theory, a three-wave correction follows every impulse. This means that instead of celebrating the new records, investors should prepare for a bearish reversal.

The anticipated decline has the potential to erase all of wave V’s gains and drag the stock back to the support of wave IV near $1000. In other words, the bulls can still add another ~20% from here, but a 40% drop might be around the corner.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

Moody’s, a Buffett Darling, Trading in Late Fifth Wave

Moody’s Corp. has been a long-time holding in the Berkshire Hathaway portfolio. It is also the seventh biggest position in it as of the end of March 2020. The company has a strong competitive advantage, it is highly profitable and growing. No wonder Warren Buffett likes it so much. The stock did decline sharply in…

Read More »

Dollar General Stock Bulls are Looking for Trouble

As a general merchandise discount retailer, Dollar General was among the handful of businesses that actually benefited from the pandemic. People piled on necessities preparing for what looked like the end of the world for a while. As a result, sales at Dollar General surged in the midst of the crisis. While its stock price…

Read More »

Veeva Systems Stock Trades in Bubble Territory

It is true that the Fed’s recently re-adopted zero rate policy and stimulus are distorting financial markets. Interest rates are like gravity to financial assets. The lower the rate, the higher asset prices go and vice versa. As a result, stocks in general tend to ignore the economic reality right now. Among the companies trading…

Read More »

PNC Financial Completes Bullish Elliott Wave Cycle

Economic crises have always been especially tough on financial companies. Usually, when the general market is falling, financial stocks are crashing even harder. PNC Financial for example, lost 81.6% in the 2008-9 recession, while the S&P 500 fell by “just” 58%. PNC Financial stock suffered more than the general market during the recent coronavirus selloff,…

Read More »

More analyses