Chart of the Day: Did Amazon Rise Up Before a Strong Quarter?
A strong rally by the tech behemoth may leave little left to run.
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Amazon (AMZN) has been a scorcher for weeks, rising higher on better volume each day. The series of higher highs, higher lows is our textbook definition of an uptrend. But that recent rise up may have been investors/traders front-running the company earnings, which will be disclosed on Wednesday after the close.
We often see a bit of hesitancy in Amazon right before earnings hit but not this time around. The crowd is extremely bullish; the stock is coming off an all-time high on April 24.
Indicators are clearly bullish and overbought. The MACD looks like it is ready to curl back for a sell signal, while the money flow at the bottom of the chart shows robust growth — big money is still piling in. The ADX (pane 4) shows a very strong trend in place, and of course that is higher.
If there is a "sell-the-news" effect following the earnings release the stock could dip into the high $240s looking for support at the January highs, or deeper than that the breakout at $225. I don't see that happening here unless the quarter is an utter catastrophe.
If the stock dips, it's a good name to buy, as AMZN could make a run to $300 by the end of the year.
We like Amazon in TheStreet Pro Portfolio and rate it a Two, or "stockpile on pullbacks."
Related: Where I'm Putting Capital in a Nervous Market
At the time of publication, TheStreet Pro Portfolio was long AMZN.
