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June 22, 2018 | What AMZN Can Tell Us

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

Earlier, I’d promoted AMZN as the only stock we need watch in order to get the stock market right. As long as it’s moving higher, the theory went, it would be difficult for the broad averages to fall.  And yet, that is exactly what has occurred in recent weeks: The retailing giant’s shares have gone parabolic, hitting new all-time highs almost daily over the last two months, while the broad averages have struggled to recoup even half of their losses from early February. Now that divergence seems likely to widen, assuming the very bullish targets I’ve just published for AMZN are fulfilled.

The most logical way for me to reconcile this seeming contradiction is to trust my charts and stick with the trend in AMZN, but to expect little more from the Dow and the S&Ps than a weak reversal of their respective downtrends. That is what I am predicting, and it is easier for me to believe than that AMZN is about to plummet from the sky. It is inevitable that this will occur eventually, but only after portfolio managers wake up one morning with an urgent desire to dump Amazon shares. We can only guess as to the possible cause of such a precipitous change of heart, but given the sunny technical picture, their epiphany would not appear to be imminent.

Another Possibility…

However, there is another possibility that can be inferred from today’s chart (click on inset).  Notice that AMZN came visually within a hair of the 1769.10 Hidden Pivot target shown.  In theory, that could have been the bull market’s last gasp. We simply don’t know, not yet. However, odds that it will turn out to be a very important top will shorten if the downtrend starts breaching lows recorded on the chart over the last month or so. In the meantime, we’ll treat Thursday’s high as a potentially major one.  This is far from an even-money bet, considering that the bull market has been chugging along since 2009. But from a practical standpoint — i.e., the way we trade the stock — the assumption will cost us little or nothing. For in fact, as long as we continue to monitor the lesser  charts diligently, AMZN cannot possible reverse higher without telegraphing the bullish intentions of its institutional sponsors from the get-go.

 

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June 22nd, 2018

Posted In: Rick's Picks

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