Amazon Revisited

 | May 03, 2013 | 9:00 AM EDT  | Comments
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Stock quotes in this article:

amzn

The last time we looked at Amazon (AMZN) together, there was a rather healthy price cluster setup where we did not end up making the key upside target (unless you counted the after-hours print near the target after earnings). But we did see a rally of just over $23 from the original cluster low and then it started to fail. If you used a trailing stop as recommended, you would have been stopped out with some gains. 

There were actually multiple entries against the original setup. Now that the old setup zone has been violated, let's take a look at the parameters in this stock all over again.

Personally, as a shopper, I love using Amazon. My Prime membership remembers all my favorite addresses. It makes it so easy to buy for myself and for others. Typically, if I can get it on Amazon, I grab it and save myself a trip to the store. I do get the free shipping on many of the items I order, and let's face it, I'd rather sit in front of my computer and update my charts rather than run around shopping.

With that being said, let's look at the current technical position of this stock. Starting with the weekly chart, I found a time count suggesting that we could be putting in a tradable low in here. Note that the current decline of 14 weeks is similar to two other prior declines of 13 and 14 weeks.

AMZN Weekly
DynamicTrader

Next let's look at the daily chart. On the daily chart, we are currently testing key daily price support at the $243.60-$245.62 area and holding. As we test this support, we are also on top of one of two time windows that also suggest a possible low in this stock. You can see the timing dates on this chart that come in April 30-May 1 or May 6-May 8.

AMZN Daily
Dynamic Trader

Now we have already seen an aggressive buy trigger for a swing trade in Amazon, as you can see on the 15-minute chart below. We did take out a prior swing high along with the 8/34 ema crossover to the upside. This tells us that it is worth placing a bet against the current support decision.

AMZN 15-Minute
DynamicTrader

Last but not least, let's take a look at another daily chart to see where a rally could have some problems on the way up if you do elect to take a bullish strategy in Amazon, whether with options or the stock itself. Here I have projected many of the prior rally swings from the recent low and looked to see if some of these projections overlap any key price retracements.

Amazon Daily 2
DynamicTrader

This chart tells me that if this bullish setup starts to play out, I would want to tighten up stops if we start to get near the $260 handle, as a failure to clear the zones on this chart will suggest a possible failure. If we can push through the same key resistance illustrated on this second daily chart, the possibility then points to a potential 1.272 target at the $295 handle.

Remember, if you take any trades against these parameters, I suggest using an initial stop and then trail it as you go, since we don't always make the targets on these trade setups. And sometimes they don't work at all!

For more information on triggers, please click here.

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