The Big 3: GOOGL, EXPE, DRAM

Marlee Caden (0:02)

Welcome back to Trading 360 I'm Marlee Caden. It's time for the big three. We've got three stocks, three charts and three trades. Kevin Green taking us through the charts. Here to take us through the trades is Scott Bauer, the CEO of Prosper Trading Academy. Great to have you both with us this morning. Scott would love to kick things off with your thoughts on how we're opening a fresh trading week here. What your expectations are for the week and the month of October?

Scott Bauer (0:25)

I mean, I think this is really optimistic. There were a lot of reasons why we, you know, maybe would not have opened or moved higher today. We all know October has the, you know, the scaries to them, if you will.

You know, there's this thing called the October effect where people really think that it's a bad month. October is not really a bad month. It actually is fairly positive. However, it is the most volatile month. So I would expect a lot of volatility coming up.

Marlee Caden (0:56)

All right, so we've got volatility coming up. Does that come into play here with any of your picks in the big three, your first one being Alphabet here a little higher on the session so far today?

Scott Bauer (1:08)

Yeah, not so much volatility. This one is really just based off of technicals and bouncing off 200-day moving average support here and Alphabet has been one of those that have really been outside of the video maybe in the spotlight and really, really shining. So I love any opportunity technically that I get to enter in here. So I'm buying a call spread going out October 30th, end of the month, $355, $365 call spread looking to pay around $3 for that.

Marlee Caden (1:41)

All right. So KG, as you look at the Alphabet technicals in the chart for Google, I mean, we have seen it moving higher so far year to date, they're up 10 percent but certainly not the best performer in the bunch. If we look over the last 52 weeks, we're up 40 percent. What are you seeing in the technicals here as it applies to Scott's example trade?

Kevin Green (2:01)

Well, Scott kind of did my job. I mean, technically speaking, it's hit in the 200-day moving average that has been a key area of support not only for the last year but if you go back in time, you have seen some buyers actually stepping in at that particular moving average here. The stock's making higher highs and technically higher lows at this point in time. We are seeing a wedge formation where we have lower highs at least for this pullback, but we are starting to get closer and closer to the apex. You have the 50-day, 20-day and 200-day moving average all at the same levels right now. Over the next couple of weeks, even if prices stay where they are at right now, we should actually see a bullish pinch of that 20-day moving average going above that 50-day moving average, which is bullish. If you are looking at the level to the upside, even if it does hit the upper area of resistance, you are looking at around $365, which is pretty much right there at Scott's strike here.

It does make sense. You have some key areas of support. You have confluence of multiple moving averages, and you do have this wedge pattern. Now, if we do break out, 385 is going to be your first major area of resistance, and then you are talking about those highs of around $405.

And if we have a breakdown, you are looking at $300 as your next major area of support. RSI is making higher highs, which is something that you would like to see. MACD, sitting around this zero line right now, nothing really in that formation bullish or bearish. So I would say this is a little bit more bullish off that technical level of support of that 200-day moving average. 365 does kind of make sense when it comes to that trades up.

Marlee Caden (3:25)

What else are you looking at in the technicals here for Alphabet, for Google, Keiji?

Kevin Green (3:30)

Yeah. If you go to the long-term, the three-year weekly chart, you do have once again a primary trend line to the upside here. This is more of a bull flag pattern where we have a consolidation, that 50-period moving average or the 50-week moving average, which is roughly close to around that 200-day moving average. It's sitting around $332 right now. And you could have a situation where we try to break above the 20-week moving average at $350.