A Fresh Look at Amazon

 | Nov 21, 2012 | 7:55 AM EST
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I think I'd prefer to focus on a stronger stock than Baidu (BIDU) today. Even though I did give you a heads-up on that one in CC, I think we should discuss Amazon (AMZN) first. If we look at a weekly chart of this stock you can see that so far we are holding on top of a key support decision with the recent low being made at the 218.18.

First if we can continue to hold above this recent low, the upside POTENTIAL (in a perfect world) comes in way above the market at the 276 handle. Even if we only see a corrective rally back to the recent highs, there is still a decent upside potential.

So far, we have seen some initial buy triggers against the recent low via a 30-minute chart. I have illustrated the initial trigger on the 30-minute chart below. There is a pretty important hurdle on the daily chart however that AMZN needs to clear if this rally is going to continue in earnest. Let's take a look at that decision on the daily chart next.





I use 100% projections of prior swing in all the markets I analyze every day. These are also known as symmetry projections as I like to call them, or measured moves as other analysts might.

In the case of AMZN I'm watching a hurdle on the way up where the most important component of this hurdle is the 100% projection of the prior largest rally seen on this chart since the Sept. 14 high was made. This prior largest rally swing lasted $15.79. The current rally from the Nov. 15 low has been $15.64 as of the close Tuesday.

The hurdle I'm watching comes in at the 233.97 to 235.73 area. It includes the 100% projection of the prior rally swing of $15.79 along with a few Fibonacci price retracements of prior swings that overlap this projection.

I am already willing to trade the buy-side of AMZN with the buy triggers that have fired off so far, but a rally beyond this key upside hurdle will suggest that purchases will be a higher probability bet if we can surpass this zone. If we are unable to clear it, I would have to tighten up stops on any longs as there will be a chance for a failure at this same zone.

Let's see what AMZN does around this key decision and then trade accordingly! To fail or not to fail, that is the question I am waiting for the market to answer!


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