E-commerce giant Amazon.com (AMZN) is known world-wide and maybe in other universes, but in the long history of stock prices man has discovered that trends can and do change. Let's examine some charts of AMZN before our next order is due to arrive.
In this daily bar chart of AMZN, below, we can see that share prices have declined over the past 12 months. Prices have been cut in half or a 50% "haircut". AMZN trades below the declining 50-day moving average line and below the declining 200-day line.
Trading volume increased since late October when prices reached the 50% correction area of $90 but the On-Balance-Volume (OBV) line has remained weak. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of AMZN, below, we see a bearish picture. Prices have made a very large rounded top formation the past three years. Prices have broken down from this top and trade below the declining 40-week moving average line. I do not see any bottom reversal patterns and where there are some recent lower shadows below $90 they are not all that impressive.
The weekly OBV line has been in a decline from the middle of 2020. The MACD oscillator is bearish.
In this third chart of AMZN, below, we used monthly price data. The chart goes back 10 years and the longer-term uptrend has been broken (trendline not drawn). Prices are pushing down into old support from 2018-19 in the $100-$75 area. A decline more than halfway into this zone is likely to mean that the support is going to break.
The monthly OBV line has declined the past year. The monthly MACD oscillator has broken below the zero line for a major long-term sell signal.
In this daily Point and Figure chart of AMZN, below, we can see a potential downside price target in the $78 area.
In this second Point and Figure chart of AMZN, below, we used weekly price data with a five box reversal filter. Here the software is projecting a price target in the $61 area.
Bottom line strategy: I will not guess about why the shares of AMZN are looking so weak but rather respect what the charts are suggesting - further weakness is possible in the weeks and months ahead. Avoid the long side of AMZN for now.
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