Alphabet GOOGLE shares may gain momentum in the coming weeks21 / 07 / 22 Visitors: 579
Alphabet (GOOGLE) shares may rise in the short term as investor pessimism reaches an extreme level.
Alphabet shares may recover as investor Pessimism reaches extreme Levels
Alphabet (GOOGLE) shares did not escape a surge in risk aversion in the first half of June, caused by fears of a recession. The stock fell by more than 10% to return to the lowest level of the previous month-to about $2,050.
However, Alphabet shares may start to rebound in the coming weeks on all stock markets, given the technical configuration and very significant pessimism of investors.
Indeed, as in May, Alphabet shares are facing relatively similar symptoms to surveys of investor sentiment at historically low levels. For example, the weekly Bank of America survey fell to 0%, which is an extremely rare indicator, while the bull/bear ratio of Investors Intelligence fell to 0.60, the lowest level since 2009.
In this context, when almost all investors are pessimistic and largely protect themselves from a downturn by buying put options (according to SentimenTrader research), it is best to take an annoying attitude and predict a rebound at a time when the excess of pessimism will pass.
Alphabet shares could rise to $2,500 in the coming weeks
From the point of view of technical analysis, we can also see a configuration very similar to the one that was known earlier this year. The stock has been consolidating for several weeks above the main support at around $2,050, while the RSI has been diverging upwards. In March, Alphabet shares jumped 15% after consolidating for several weeks above the main support of about $2,500, while the RSI diverged.
Therefore, it is not surprising that Alphabet shares rose along with the broader stock markets and tested their recent high of around $2,400 or even the former support of $2,500 before the main downtrend continues.
Of course, this short-term bullish outlook will be cancelled out if the stock falls below the $2050 support.