We will buy on Amazon, but will traders buy AMZN?
The S&P index is trading at all time record highs today. Yippee. Great news for the broad market.
Looking at the daily chart for the SPX above, the price correction into the US election fell to the 200 day MA (green line in the chart above). It actually fell below that MA in after hour trading on Election night but during normal trading hours, the price held the level perfectly.
Subsequently, the pair moved above the 50 and 100 day MA a week after the election, and has traded above those MAs since that time. The inability to move below the 100 (blue line) and 50 (white line) day MAs shows a desire to buy from the market traders. Bullish.
As we enter the Thanksgiving week in the US, the BIG shopping days lie ahead. Friday is affectionately called Black Friday. Monday has taken the name Cyber Monday. Now there may be some who think those "sale days" are not always reflective of the best prices - or the best days - for shopping, but they certainly get a lot of attention, and attract a lot of shoppers.
The largest of the largest is Amazon. People will shop on Amazon on cyber Monday - for sure. It is just so convenient. They will also shop on Black Friday and after cyber Monday (and beyond) as well. Amazon is just so convenient at all times.
So certainly the stock must be at all time highs too. Right?
Convenience and price is important for consumer shopping, but for stocks, price AND earnings are important too. AMZN's stock price is not exactly a bargain with regard to earnings. Earnings were a disappointment in the 3Q and the PE at near 200 is a bit high. There is no Cyber Monday sales with regard to the AMZN stock price.
Looking at the stock technically (see daily chart below), the price moved lower and tested it's 200 day MA (green line in the chart below) into the US election - just like the S&P. Holding the MA is bullish technically. Buyers came in and bought.
In addition, the buyers also bought against the 38.2% retracement at 705.106. So buyers leaned against TWO key techincal levels and the price is now higher. We currently trade at around $775.
However, note where the price remains vs. the 100 (blue line) and the 50 day MA (white line). Versus the 100 day MA (blue line), the price remains below it at $777 today. The high reached $776.25 today - just short of that key MA. The 50 day MA is higher still at 796.97 currently. We remain $20 away from that level.
So technically, the picture for Amazon is mixed as we head into the holiday shopping season. We are above the 200 day MA. We are above the 38.2% retracement, BUT the price remains below the 100 day MA and 50 day MA. Those levels are key.
In fact just look at the 50 day MA line. In September it held support. In November, it held resistance. That MA will be key going forward.
So overall, we are not into open seas for the grand daddy of all consumer related stocks with the biggest of all shopping days ahead.
Do we get above and stay above into Cyber Monday, OR is this stock just too expensive?
The answer will come with help from the key technical tools like the 100 day MA and the 50 day MA. Get above 100 day MA and things are looking good. Get above the 50 day MA and things are looking even better. Fail and there could be an after holiday hangover for the stock.
You may buy on Amazon, but will your buying list include AMZN? What do you think?