The set-up: This is purely a technical trade. I like Google, the company, but Alphabet (GOOG, GOOGL) the stock is showing signs that it could break support. If that happens, it has a long way to fall.

The chart:

Alphabet has demonstrated relative weakness the past few months. The $920 level is a line in the sand; there’s no trade here unless it breaks through but — if you get that breakthrough — the next support level is around $840. With a recent high of $960, there’s a 2-to-1 reward-to-risk profile on this trade.

Confirming factor: Supporting this technical trade is that the Relative Strength Index on Alphabet has trended lower while the stock is trading sideways. That’s an extra tea leaf to read here; the market has been trending higher but GOOGL hasn’t been participating.

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Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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