- I discuss Amazon’s recent decline and identify $240 as a key support level following prior resistance and a post-earnings gap.
- While short-term weakness may persist, I view the pullback as a buying opportunity within a broader uptrend.
Amazon has plunged during trading on Thursday as we've seen a bit of negativity out there. That being said, the $240 level should offer a bit of support as it was previous resistance. It’s also worth noting that the gap from the earnings call, which was strong on the 30th of October, hasn’t been filled yet. Whether or not it gets filled, I don’t know.
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I do recognize that we will probably try to do everything we can to at least somewhat fill that gap. The $240 level being broken below opens up the possibility of an attempt to fill the gap, maybe even chase the 50-day EMA. However, I’m looking for a bounce and getting involved in this market on the right-hand side of the V pattern that will inevitably form. I have no interest in shorting not only Amazon, but any of the other big stocks, because despite the fact that there’s a lot of noise out there, if we take a look at the longer-term charts, Amazon just broke the back of a massive double top in that gap.
Buyers Will Return Eventually
I think you’ve got a situation where it’s only a matter of time before the buyers come in and recognize that Amazon is a value. The question now is when? I don’t know that answer. But I do recognize that if you’re patient enough, you should be able to get the stock relatively cheap—on a bit of a sale, if you will—and take advantage of the overall uptrend. It’s not until we break down below the $210 level that anything truly has changed, although the deeper we go to the downside, obviously, the weaker it looks, at least in the short term.
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