Amid Market Rotation, Where Is Amazon Stock Headed?

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Jim Cramer mused on Real Money that the stock market might be out of the doghouse, but the FAANG stocks are still hated by investors. Does that make them a buy?

 

Cramer dove in to find out on Mad Money Wednesday night and last on his short list of companies was Amazon.com Inc. ( AMZN) , which may be despised by the White House, but has been a huge deflationary force in our economy. Cramer remained bullish on this  Action Alerts PLUS holding.

 

Let’s check out the charts and indicators.

 

In the daily bar chart of AMZN, below, we can see that prices are moving up toward a possible test of the underside of the declining 50-day moving average line. This indicator may (or may not) provide some resistance as it did in late May. The rising 200-day moving average line acted as support last month.

 

The level of trading volume looks like it has continued to decline from early June and that is not particularly positive for chart readers. The daily On-Balance-Volume (OBV) line is flat to slightly weaker suggesting that buyers and sellers are in balance or that sellers are slightly more aggressive.

 

The Moving Average Convergence Divergence (MACD) oscillator is moving up to the underside of the zero line. We could see the MACD oscillator fail at this juncture too. We should see soon enough.

In the weekly bar chart of AMZN, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has been “floundering” since April and suggests that sellers have been more aggressive the past four months.

The MACD oscillator is pointed down toward the zero line in a take profits sell mode but the two averages that make up this indicator have begun to narrow. We could see a bullish crossover in the weeks ahead if prices strengthen from here.

 

In this Point and Figure chart of AMZN, below, we can see a tentative upside price target of $2,029. A tradeable rally but not new highs.

 

Bottom-line strategy: Maybe AMZN continues to eat everyone’s lunch (and dinner and breakfast) but the charts suggest a $1,750 to $1,900 trading range with a slight bias to the downside now.

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2019-09-12 07:35:00

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