We’ve been using the 875.20 rally target shown (see inset) for quite some time, and it has served us well, keeping us on the right side of the stock even when its canny handlers were shaking it down brutally. Their shenanigans should have fooled no one, since AMZN is one of a handful of stocks that every portfolio manager absolutely must own. Notice that even when they were creating air pockets in order to steal shares from frightened pensioners and widows, the lows of the respective swoons to the red and pink lines were not sufficient to fill a ‘mechanical’ bid. The stock has always been a buy on weakness, and by now we should have come to understand that such opportunities will be fleeting. That said, AMZN appears unlikely to rise much farther without a substantial correction. Moreover, the next one, presumably from 875.20, could prove to be the dip that fools everyone. If so, it will hold enormous consequences for the U.S. stock market. Is the fat lady warming up her pipes? We may know within the month. _______ UPDATE (Mar 12, 7:34 p.m. EDT): The yellow flag is out, since AMZN began each of the last three trading days with a fleeting fake-out rally that will have trapped more than a few bulls. In addition, the moderate uptrend that resulted failed to pierce any minor rally targets, even if it nominally achieved them. The stock could sell off $50 or more without affecting the 875.20 target, but we’ll let it do whatever it’s going to do before we formulate a new trading plan. _______ UPDATE (Mar 15, 8:01 p.m.): AMZN’s mincing steps higher over the last few days do not inspire confidence, but the 875.20 target remains valid nonetheless. We should keep any eye on corrective abc patterns on the lesser intraday charts, especially if they should start to exceed their ‘d’ targets, since that would be a very bearish sign. We should also plan to get short if and when 875.20 is closely approached. _______ UPDATE (Mar 19, 6:00 p.m.): AMZN has been in a gentle sideways correction for more than three weeks that looks bullish. However, such placid consolidations are quite literally a picture of complacency, and that is why we shouldn’t trust our eyes to fill in the next, seemingly inevitable rally. Time will tell, but a dip below 837.75 in the days ahead should be viewed as a yellow flag. Click here for a graphic picture of this possible danger signal.
