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June 25, 2018 | AMZN Flashes an Ominous Sign

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.

Monday’s powerful selloff in AMZN — the heart, soul and muscle of the bull market — did serious technical damage to the stock’s daily chart.  It’s been almost a year since we’ve seen a similar occurrence. That one led to a bull market that saw the company’s shares nearly double in price. However, at these heights, it seems extremely unlikely that this will recur.

Over the last six months, I’ve repeatedly asserted that AMZN is the only stock we need watch to gauge the strength of the bull market. That still holds. The company has a huge presence in the retail sector, global reach and the savvy to dominate any market in which it chooses to play. If AMZN is at the beginning of a hellacious dive, then so are the broad averages. For a more detailed technical assessment, check out my latest update for AMZN in the tout below.  From a technical standpoint, it appears extremely unlikely that sellers are spent. Given the impulsive nature of today’s downthrust, a further implication is that the stock’s next big rally will be corrective and therefore a potential shorting opportunity. Even so, we shouldn’t expect the AMZN’s cunning sponsors to make it easy for us to pile on.

Uh-Oh! ‘No Sign of Panic’

One further, distressing note: Today’s selling was far too calm to be climactic. The ARMS index, a very useful tool derived from the Advance/Decline line, sniffed no panic whatsoever in today’s plunge. This suggests very clearly that complacency still reigns. Although it is said they don’t ring a bell at the top, this may be as close to one as we’re going to get.

 

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June 25th, 2018

Posted In: Rick's Picks

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