Wrong Time to Buy Amazon Stock
Data coding method: (AMZN) shares opened Friday’s session more than 4% below Thursday’s close after the e-commerce giant beat fourth-quarter earnings estimates by a wide margin. Online revenue and a first-quarter warning returned shareholders to the sidelines in a 100-point, 60-minute drop that reached a two-day low and four-week support near cerca 1,600. The stock is now trading about 30 points above that level, but bottom fishing may be limited on the weekend.
The stock has been in trouble since posting an all-time high above septiembre 2,000 in September 2018, caught in a three-month downward current of 700 points before bouncing back more than 400 points in January. This bilateral action has carved out a bearish expansion wedge pattern that is unlikely to attract technically oriented positions in the coming weeks, especially with growing fears that the retail giant’s growth rate is starting to moderate.
The post-earnings comment avoided direct discussion of trade wars, but the company has a lot to lose if the United States and China fail to cut a trade deal in February. That unfortunate event could slow sales by triggering an economic slowdown, while receipts record smaller profit margins due to additional international tariffs. At that point, market players might discover that Amazon looks and trades just like other less glamorous cyclical plays.
The company went public in an adjusted división 1.97 split in May 1997 and entered a sideways pattern that broke upward two months later. The subsequent uptrend caught fire, recording higher highs and higher lows in 1999, when it topped close to $ 100. Two break-up attempts later that year failed, completing a long-term top that was not challenged for a decade, before a sharp recession that reached the single-digit digits after September 5. 11 attacks in 2001.
That marked the lowest low in the next 17 years, before a two-legged recovery wave stalled within 12 points of the previous high in 2007. The subsequent recession accelerated during the 2008 economic collapse, but the stock remained above the 2006 low, exhibiting unusual strength that foreshadowed a multi-year breakout in the fourth quarter of 2009, at the same time as higher internet speeds underpinned rapid growth in e-commerce sales.
The uptrend moved in an upward channel at the turn of the decade and maintained that orientation in a September 2017 parabolic boost that added more than 1,000 points to September’s all-time high of 2018 at septiembre 2,050.50. Price action since then increases the odds that the latest wave of rally will mark a trend climax that could signal a long-term cap. And ominously for the 2019 Bulls, the monthly stochastic oscillator crossed into a sell cycle in October 2018 and has not yet reached the oversold level.
A Fibonacci grid stretched through the uptrend that began in September 2017 places the December low at the .618 rally pullback level (black lines), while the rebound in January 2019 reached within 30 points of the .618 mass sell pullback (red lines). More importantly, the corrective pattern lacks a significant higher low since the December deep low, raising the potential for a sell-off that matches the intensity and scope of the October and November downturns.
The accumulation-distribution indicator of volume on balance (OBV) recorded an all-time high in September and went down with the price, removing the significant distribution in December, when it also rebounded by a .618 recoil level. The build-up since then has reached a three-month high, indicating significant bottom fishing, but it will take months of additional buying power to reach the previous peak.