My brother texted me a few months back asking, "When will Amazon start to move?" Like many investors, he was frustrated to see it meander sideways while many growth stocks went on climatic runs in late 2020 and early 2021. Sometimes, the stock market can be hard to understand. I would bet you pretty much see Amazon trucks every time you are out or at least see packages from Amazon piled up by your neighbors' doorsteps. It's hard to imagine anyone who does not use Amazon in some shape or form these days. Even if they are not shopping, they may be watching Prime videos, reading books on their Kindle, or using one of Amazon's other products or services. I even saw an Amazon locker at the gym the other day.
So why hasn't AMZN been moving the last few months? I'm not sure, and I honestly don't care. I really don't concern myself with the reasons. Instead, I like to focus on the chart So what are the technicals saying? Amazon has been consolidating in a sideways manner over the last eight months or so. Although frustrating, these types of long, drawn-out bases can be quite constructive as they wear out impatient traders who feel the need to flock towards the latest flavor of the week. On the monthly chart, I really like the way AMZN has moved sideways towards its' 10-month moving average after hammering down to shake out weak holders. Big bases on the monthly chart often offer enormous potential. I noted this in April 2020 as Amazon was one the first stocks I bought after going into cash during the COVID-19 bear market.
On a daily chart, Amazon saw some heavy volume buying coming in today. Another good sign is that Amazon has held its' 20-day ema after moving up strongly off its' lows and is consolidating in a relatively tight and orderly fashion. When looking at the chart, it appears that there has been a shift towards accumulation versus distribution since early March.
It is important to note that Amazon reports earnings this Thursday, April 29 after the closing bell. Earnings are a time where anything can happen. Consequently, I used a wider stop loss than normal when purchasing Amazon today to ensure proper risk management in the event that Amazon gaps down hard. No matter how much I love a company and its' chart, I've been hit in the gut too many times to neglect this crucial aspect of trading.
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Full Disclosure: I currently own Amazon.com.
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