Monday’s powerful selloff in AMZN — the heart, soul and muscle of the bull market — did serious technical damage to the stock’s daily chart. It’s been almost a year since we’ve seen a similar occurrence. That one led to a bull market that saw the company’s shares nearly double in price. However, at these heights, it seems extremely unlikely that this will recur.
Over the last six months, I’ve repeatedly asserted that AMZN is the only stock we need watch to gauge the strength of the bull market. That still holds. The company has a huge presence in the retail sector, global reach and the savvy to dominate any market in which it chooses to play. If AMZN is at the beginning of a hellacious dive, then so are the broad averages. For a more detailed technical assessment, check out my latest update for AMZN in the tout below. From a technical standpoint, it appears extremely unlikely that sellers are spent. Given the impulsive nature of today’s downthrust, a further implication is that the stock’s next big rally will be corrective and therefore a potential shorting opportunity. Even so, we shouldn’t expect the AMZN’s cunning sponsors to make it easy for us to pile on.
Uh-Oh! ‘No Sign of Panic’
One further, distressing note: Today’s selling was far too calm to be climactic. The ARMS index, a very useful tool derived from the Advance/Decline line, sniffed no panic whatsoever in today’s plunge. This suggests very clearly that complacency still reigns. Although it is said they don’t ring a bell at the top, this may be as close to one as we’re going to get.