Alphabet Inc (NASDAQ:GOOG) and Tesla Inc (NASDAQ:TSLA) were trading mostly flat on Monday in tandem with the S&P 500, which was also showing low volatility and trading near to Friday’s closing price.
Alphabet is set to print its second-quarter financial results after the market close on Tuesday and the stock’s movements may remain muted prior to the event just as Tesla’s stock did over the three days prior to its earnings print.
Tesla printed mixed second-quarter results on July 20 and the stock rallied almost 10% the following day. For the quarter, Tesla reported adjusted earnings per share of $2.27 on revenues of $16.93 billion compared to the consensus estimate of earnings per share of $1.91 on revenues of $17.39 billion.
Alphabet is expected to print earnings per share of $1.35 on revenues of $70.35 billion.
In The News: Tesla and Alphabet both made headlines on Sunday following a report Tesla CEO Elon Musk had a fling with Alphabet co-founder Sergey Brin's wife, Nicole Shanahan in December. Musk dismissed the claim as another “hit piece,” claiming he hadn’t had sex in ages and that he was out partying with Brin on Saturday night.
Musk also pointed out that the Washington Post, which wrote the initial report, has been wrong before, giving an example of when the Journal claimed the Federal Bureau of Investigation wanted to arrest him.
As for the two stocks, the Musk/Shanahan news is unlikely to have any effect on how Alphabet and Tesla trade. Brin stepped down as the CEO of Alphabet in 2019 and traders and investors of Tesla are used to Musk making or breaking big headlines.
Technically speaking, Tesla looks stronger than Alphabet, although Alphabet’s earnings reaction is likely to be the deciding factor on whether the stock trades bullishly or bearishly over the next while.
It should be noted, however, that events affecting the general markets, negative or positive reactions to earnings prints and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.
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The Alphabet (GOOG) Chart: Alphabet has been trading in a rising channel since May 24, in a fairly consistent uptrend. The uptrend within the channel negated July 20, when the stock printed a lower high and a downtrend was confirmed on Friday with the formation of a lower low.
If Alphabet falls through the lower ascending trendline of the pattern on higher-than-average volume, a steeper downtrend could be on the horizon. If Alphabet tests the lower trendline as support and bounces, an uptrend within the channel could resume.
On Monday, Alphabet was printing an inside bar pattern, with all of the price action taking place at the lower end of Friday’s range. The pattern leans bearish because Alphabet was trading lower before forming it.
Alphabet has resistance above at $111.50 and $117.23 and support below at $106.53 and $101.08.
If the bull flag pattern is recognized, the measured move is about 18%, which suggests Tesla could soar up toward the $950 level. Traders and investors can watch for Tesla to break up from the upper descending trendline of the flag on higher-than-average volume to gauge whether the pattern has been recognized.
The possible bull flag pattern has also confirmed that Tesla’s uptrend remains intact, with the formation of a higher low. Tesla reversed course into an uptrend pattern on June 17.
Tesla has resistance above at $821 and $877.95 and support below at $780.79 and $745.63.
