NASDAQ pulls back with Alphabet called to open -7%

Summary:

  • Nasdaq futures trade back below 7800 level

  • Alphabet to begin sharply lower after earnings

  • Amazon prints Golden Cross

 

There was a bit of selling seen in US indices after the closing bell last night with the Nasdaq (US100 on xStation) the worst hit as the markets reacted negatively to the latest set of results from Google parent company Alphabet (GOOGL.US on xStation). The decline in after hours trade saw the benchmark pullback from its highest ever level around 7880 to end the day in the red. Previous record highs around 7725 could now be seen as possible support for the market and its not really unless price drops below there that the bears can get too excited and hope for a sustained decline.   

 The Nasdaq pulled back from record highs to end lower yesterday, with the after-hours drop in Alphabet having a clear negative impact on the market. Source: xStation

 

For Alphabet, an increase in the top line of 17% for a company that now has an annual turnover of $36.3B would normally be seen as impressive, but analysts had even more lofty forecasts with the figure around $1B less than the street consensus. The shortfall was blamed on numerous factors such as the strength of the US dollar and a strong corresponding quarter last year, but there is a growing concern that the core advertising business may have peaked. Shares are called to begin more than 7% lower this afternoon after ending Monday at their highest ever level.

 

Another stock which has a sizable weighting on the NASDAQ is Amazon, and here the outlook is markedly better. The stock has just posted its seventh consecutive week of gains to mark the longest winning streak in a decade and also a Golden Cross. The Golden Cross occurs when the 50 period SMA moves above the 200 and has not occurred in Amazon since 2015 when the stock was trading around 370.  Shares of Amazon have gained nearly 30% this year, but at $1,938 a share the stock is still about 5% from its $2,050 intraday all-time high from September.

Amazon has been on a great run of late and with the market recently printing a Golden Cross. Are there more gains to come? Source: xStation  

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