Technology

Alphabet, Splunk and Other Tech Stocks With Recent Death Crosses

Trey Thoelcke

Published: November 30, 2018 7:35 am

Last Updated: January 11, 2020 2:18 pm

Golden crosses and death crosses are common signals in technical analysis and refer to the relationship between short-term and long-term moving averages. The golden cross typically is seen as a bullish sign, perhaps a stock that has or is about to break out. The death cross, on the other hand, can be a bearish sign, perhaps warning investors to get out of the way or signaling that it may be time short the stock.

Here are five top technology stocks that recently saw their 50-day moving average cross below the 200-day average, a death cross, and could be considered contrarian plays or short opportunities.

Alphabet Inc. (NASDAQ: GOOGL) saw its death cross mid-November, and the gap between the two averages has widened since then to around 2% of the share price. Morgan Stanley lowered its price target on the stock from $1,515 to $1,500 mid-month. Shares are less than 10% lower in the past three months, while the Nasdaq is down about 10%. Analysts on average recommend buying shares.

Palo Alto Networks Inc.’s (NYSE: PANW) death cross came last week, and the gap is up to a couple of bucks so far. Short interest in the stock ticked up in the most recent reporting period. In the past 90 days, the shares are down 24% or so, and analysts recommend buying the shares.

Splunk Inc.’s (NASDAQ: SPLK) death cross also occurred last week, and the gap between the two averages was more than 5% of the share price on last look. Though the company just posted better-than-expected quarterly results, the shares still are down more than 19% from three months ago. Yet, here too analysts recommend buying shares.

Yelp Inc. (NYSE: YELP) saw its death cross last week as well, its second one this year. The prior one was back in the beginning of June. Here too, short sellers increased their bets in the most recent settlement period, and the shares are down more than 27% from three months ago. In this case, the consensus recommendation is to hold shares.

Zynga Inc. (NASDAQ: ZNGA) saw a death cross before Thanksgiving, and it was also the second one this year. The prior one was in March, and the averages didn’t switch back until June. This was one of the most shorted Nasdaq stocks in the first half of this month. The shares are down more than 12% in the past 90 days. Analysts recommend buying the shares, but the sentiment is weak.