It’s that time of the year again. Black Friday. When retailers go all out, like opening stores for their black Friday sales kick-off on a Thursday, and that Thursday being Thanksgiving. Luckily, for those of us who have no interest in being berated by crowds, there’s Amazon.com. Amazon offers a practically week long’s worth of Black Friday deals on various electronics, clothes and other items. Given the circumstances I thought it would be a good time to check out their chart.
Outside of Black Friday, Amazon’s been in the news for all the Netflix/Icahn speculation going down and how Amazon could acquire Netflix (doubt it). That being said, Netflix CEO Reed Hastings claimed that Amazon was losing around $1 billion a year on their Amazon video service – that’s a lot of capital. While this news could have a negative impact, the recent decline seen below is more likely due to the large tech declines we’ve seen since the market turned bearish from the election and fiscal cliff.
The stock hit a high in late September around $264. The stock bounced right off this resistance on a rebound a few weeks later. Of importance here was the large divergence happening in our momentum RSI indicator. The divergence actually started happening in early September and has since took a sharp decline. It was eventually confirmed with lower lows in the stock as seen by the downward channel that formed, along with a break of the 50 day MA. While the downtrend is still in tact the past few days movements could spell the end of this. Amazon bounced off its 200 day MA recently and also gapped up to close right on the downward upper trend line. The gap is significant as it shows some strength from the bullish side. Rather than declining further towards the bottom channel line, the bulls stepped in and forced a move. It’s possible some shorts covered here but nonetheless a positive upward move. The downward sloping RSI line has also been broken to pair with the close on the channel line. Lastly, ADX is turning bullish, though the range between positive and negative movement indicators has been very tight since the top was hit.
Whether or not Black Friday really has an impact technically here remains to be seen, but the timing is curious. From here, we’d watch how the stock reacts around that downward channel line as well as if it breaks the lower lows that have been forming. A solid confirmation there and we could be heading back towards $260.
