Market-watchers need only focus on AMZN to read the stock market’s vital signs accurately. Unlike most of the unicorn stocks, it is not just some app that sits on a smartphone. The company sells real things, builds brick-and-mortar warehouses and invests enormous sums in delivery infrastructure. More than 300,000 employees work for Amazon. It plows nearly all of its profits into improvements that will make it even more dominant in the retail world. As far as the stock is concerned, it has been a screaming buy on every dip. Stage-managed earnings ‘disappointments’ have invariably been used by portfolio managers to create buying opportunities. If the big players were to hold just one stock, for many of them it would be this one. From a technical perspective, we’ve been using an 875.20 target that comes from a pattern on the daily chart. The chart shown is of monthly degree, however, and it contains an even more important Hidden Pivot target at 885.19; plus, there’s an additional, key resistance at 896.71. Taken together, these three numbers suggest the stock could have trouble pushing above $900. Because AMZN’s trajectory holds the key to the eight-year-old bull market’s longevity, we’ll be watching price action at those numbers very closely. The stock has been an unqualified ‘buy’ for a very long time, but caution is now warranted just above current levels. _______ UPDATE (Feb 20, 8:11 p.m. EST): The 875.20 target given above comes closest, prospectively, to equaling the targets I’ve noted in today’s E-mini S&P tout and the latest update to the DJIA tout. For the time being, I am making AMZN touts visible only to paying subscribers. _______ UPDATE (Feb 22, 10:27 p.m.): The yellow flag is out, since AMZN is struggling too hard to reach the minor target at 863.22 (click here for chart). From a trading standpoint, the stock can be shorted via ‘camouflage’ using the 15-min chart, with the penultimate price bar as a point ‘a’ high, and with ‘b’ having exceeded the 853.06 low recorded Wednesday at 11:00 a.m. This is expert play, but anyone can follow along to see how it turns out.
_______ UPDATE (Feb 26, 8:15 p.m.): My Feb 22 cautionary note proved timely, since it anticipated the $20 plunge (click here) in the stock that ensued. The short I’d suggested was possible but hardly easy, since the entry trigger came in the dead of night on Thursday. The subsequent selloff generated a strong bearish impulse leg on the hourly chart to which we will need to pay close attention, given AMZN’s status as the most important stock-market bellwether.
