Google Showing High Relative Strength Post Earnings: Swing Trade Setup With Risk Management

As the market pulls back, we are looking for stocks that are resisting the selling pressure and exhibiting the best relative strength. Alphabet GOOGL gapped higher following a well-received earnings report and is consolidating.

Alphabet: Provides online search, internet content services, and web-based advertising to cite their main businesses.

Group: Internet Content group is in a stage 2 uptrend.

Pattern Description: A Cup and Handle style pattern with a pullback/consolidation post earnings. This example has a high handle that is pulling back on top of its prior base. Note the volume dry up in the high handle.

Risk Management/Trigger: I am looking for the QQQ QQQ to find support around the 50sma to help with the timing of this trade. The idea is to buy a breakout of the diagonal on the GOOG chart combined with the breakout in a horizontal type of pivot, at least taking out a prior daily high. This could take days, or it could fail prior to a break invalidating this setup. My stop loss would be below the pivot/swing low of 127.85.

Leif Soreide is a former US Investing Championship winner, MBA in finance, entrepreneur, and founder of www.championteamtrading.com.

For educational purposes only.