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28 November 2011
Amazon.com (AMZN) has taken a beating over the course of the past two months after hitting all-time highs back in October. I know I've tried to trade it a couple of times with no success. The last time I tried it was when it was already well oversold, and testing the 200-day moving average. I was confident that it would bounce off of it, but boy was I wrong. It cut right through support like it was butter and I took a loss on it.
But we've seen a lot of stocks take haircuts lately, and unlike some of its counterparts, (i.e. Netflix - NFLX) this stock isn't going anywhere. In fact I would put AMZN in the same tier as Apple (AAPL) in the sense that they are cornering their market quite nicely, no one is really competing with them adequately, and they continue to expand and introduce new products and services, and new ways of just doing business in general.
Here's the Amazon.com (AMZN) Breakdown:
- Price support sits right at $181 over the past year, and yet again it has bounced off of it. Now we need to see if it can hold it in the face of new market headwinds.
- Head and shoulders has confirmed, and textbooks would tell you it could/should drop as far as $155. Before settling down.
- When reading volume, there are no clear patterns or signals that we should be alerted to.
- I don't believe AMZN will test $155. However, I believe at this juncture, whether it can hold on to the $181 price level depends largely on how much the market can bounce before heading lower yet again (should it do that), and the relative strength of AMZN against broader selling pressures in the market. If it can consolidate against market weakness, you have a definite buy signal.
Please wait...
Comments
Not convinced I will trade it because I still lean to the bearish side. I would put a near term target of about $214 if it can break thru $200 barrier.
Stochastics and RSI suggest that it is very near a daily bottom after a long period of volatile consolidation.
Strange that it sold off so dramatically during the season when intuitively I would expect it to rally.
Could be a great swing trade into mid December. Sure would be nice to catch a momentum stock for some Christmas cheer.
Swings have been amazingly consistant (reversal predictable as expected by indicators) as far as trend over the last several months. Much less noise than with other charts.
I will look into some underlying fundamentals & events....
Would you take MELI long and AMZN short? or vice versa on a pair trade?
The whole decline in AMZN is incredible really. Problem, like you said is trying to get behind it from a swing-trade perspective, when this market has so many problems to it.
I'm beginning to get great feel for the Ichimoku system, I like it because it gives the chart trend direction and resistance levels at a glance. Subjectivity is only in the interpretation not in the lines I might draw on it. Ichimoku is especially useful in commodities and currencies because so many traders use it in those assets classes.
I havent had time to review the fundamental drivers or pair trade analysis for MELI/ AMZN that I would have liked to complete. Intuitively it appears as solid trade and with your skills I'm certain you can make it work.
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