Chart of the Day: Amazon Remains on a Charted Course
Amazon is consolidating at a higher level, preparing for its next move.
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The recent surge higher in Amazon (AMZN) has been impressive, but at some point the buyers were going to run out of fuel (funds to buy) and the stock would suddenly find a base level. This is technically where buyers and sellers meet and agree on a price zone; for Amazon that could be $250-270.
It is important to identify levels where buyers may pick up shares or sellers might appear. The buying level is critical to know if a certain price is going to hold from an intense bout of selling (higher volume). Amazon is still searching, but it appears the upside is capped for the moment.
The stock has been a juggernaut, rising up sharply after earnings and following through to the upside. The technical indicators a month ago were portraying bullishness, but now they are rolling over. However, before you become bearish on Amazon these indicators are simply rolling over from higher levels. As the price action moderates, the indicators slow down their pace.
MACD has rolled over but so has stochastics (momentum), a clear sign the short-term uptrend is over for now. Without too many catalysts to drive the stock higher we look for Amazon to establish a range, get “boring” and start to consolidate.
Eventually this stock is likely to make a run to $300, but likely not before summer (unless some super positive news drives the stock).
We like Amazon in TheStreet Pro Portfolio and rate it a Two, or “stockpile on pullbacks.”
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At the time of publication, TheStreet Pro Portfolio was long AMZN.
