As a long-term trend-follower, my goal is to identify stocks that are demonstrating signs of accumulation and to follow the uptrends as long as possible. But it also means I am always looking for stocks that are showing short-term weakness within a long-term uptrend, as that can often mean ideal entry points to reengage with a top performer. In the case of Alphabet Inc.
(GOOGL) , we see price approaching a "confluence of support" where multiple technical indicators agree on a particular price range. This could mean that GOOGL is approaching a buyable point within a long-term uptrend, while also giving us a clear stop signal in case the short-term downtrend continues. While Alphabet has been in a primary uptrend since the end of 2023, there have been a number of fairly significant drawdowns of over 10% along the way.
So while the recent pullback of about 19% has meant plenty of short-term pain for shareholders, it's been a fairly common occurrences over the past 18 months. On the most recent pullback into a March low, GOOGL shed about 15% before reaching its 200-day moving average. Within a week of bouncing off the 200-day, we saw a buy signal from the PPO indicator, confirming a positive trend rotation.
There was a similar PPO buy signal in November of last year, soon after the October low. In both cases, a break back above the 50-day moving average served to confirm a return to the long-term uptrend phase. Back to the current price action, Alphabet is close to testing its 20.