The shares are down about 1% at last check and have declined each day this week. That’s even as the company’s 20-for-1 stock split is scheduled to go into effect on Monday, July 18.
While a stock split does not change the value of the business, statistics highlight how it can act as a catalyst for the stock price over the next 12 months.
So far this year, we’ve seen strong performances before the split but poor performances afterward. That goes for Amazon as well as Shopify (SHOP) – Get Shopify Inc. Class A Subordinate Report. It’s classic “buy the rumor, sell the news” price action.
Will we see more of the same when Alphabet does its split?
Daily chart of Alphabet stock.
Chart courtesy of TrendSpider.com
Alphabet stock found support at $2,500 throughout the first quarter. The shares even briefly hit all-time highs in February near $3,031 after the Mountain View, Calif., company reported strong earnings and declared the 20-for-1 stock split.
Once $2,500 failed as support, the shares didn’t bottom until hitting $2,038 in May. That came just above the 50% retracement from the all-time high down to the 2020 low.
Scroll to Continue
Since then, Alphabet stock has been riding uptrend support higher (blue line) but has struggled with $2,375 as resistance.
It’s not uncommon for a stock to rally ahead of an event, but while last week we saw some nice gains in Alphabet stock, the shares have lost virtually all their recent momentum.
From here, the bulls need to keep an on this month’s low and last month’s low between $2,100 and $2,115. A break of this zone could trigger a monthly-down rotation, putting the 2022 low in play near $2,038.
Below that opens the door to the obvious: $2,000 (post-split that would be $100).
If Alphabet stock really accelerates to the downside — likely alongside a broader market decline — then it could put the $1,780 to $1,800 zone in play (post-split that would be $89 to $90).
There we find the 61.8% retracement and the 200-week moving average.
Keep in mind: Along with Apple (AAPL) – Get Apple Inc. Report and Microsoft (MSFT) – Get Microsoft Corporation Report, Alphabet has been one of the strongest names so far this year in tech. So if the bulls can push it higher, it may piece together a formidable rally.
Specifically, a move above $2,270 puts Alphabet above the 10-day, 21-day and 50-day moving averages.
That opens the door to $2,375, then $2,500. Or post-split, that’s $113.50, $118.75 and $125, respectively.