Downside Looming in Amazon.com?
Amazon.com has been dead in the water since Labor Day. Now potential signs of a downtrend may be taking shape.
The first thing jumping off the chart are the series of higher lows and lower highs beginning in September. This produced a long triangle pattern that AMZN broke to the downside late last month.
That decline entrenched prices below the 200-day simple moving average (SMA). Buyers tried to defend that level on February 26, but lost the fight a week later. Then it was the sellers’ turn on March 11, turning a potential support area into resistance. Further lingering below this SMA could signal a trend change in the e-commerce giant – especially if the 50-day SMA comes down to form a “death cross.”
The recent drop and lower high around $3,100 is also noteworthy because it was near the lows of mid-November-early January. Again, will old support become new resistance?
Finally, AMZN’s reaction to its last earnings report showed potential fatigue. Profit and revenue both surpassed consensus. The stock tried to rally but failed, resulting in a bearish outside day at the top of the triangle.
Overall, AMZN is lot like Apple at this time. Both are major long-term growth names. However, they’re widely owned and offer less benefit from the economic recovery. This is especially true for AMZN now that traditional retailers are reopening.
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The first thing jumping off the chart are the series of higher lows and lower highs beginning in September. This produced a long triangle pattern that AMZN broke to the downside late last month.
That decline entrenched prices below the 200-day simple moving average (SMA). Buyers tried to defend that level on February 26, but lost the fight a week later. Then it was the sellers’ turn on March 11, turning a potential support area into resistance. Further lingering below this SMA could signal a trend change in the e-commerce giant – especially if the 50-day SMA comes down to form a “death cross.”
The recent drop and lower high around $3,100 is also noteworthy because it was near the lows of mid-November-early January. Again, will old support become new resistance?
Finally, AMZN’s reaction to its last earnings report showed potential fatigue. Profit and revenue both surpassed consensus. The stock tried to rally but failed, resulting in a bearish outside day at the top of the triangle.
Overall, AMZN is lot like Apple at this time. Both are major long-term growth names. However, they’re widely owned and offer less benefit from the economic recovery. This is especially true for AMZN now that traditional retailers are reopening.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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