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Category Archives: Amazon

Amazon Bull Trap?

 

This Amazon bull market can’t last forever, but it sure looks like it will keep soaring to the heavens, after all they are crushing brick and mortar stores consistently. I guess AMZN investors never heard about the trade wars that may be starting or is Amazon impervious to any trade war or recession?  The move in 2007, to late 2008 is a potential wave 3-4 in Primary degree, and what followed fits better into a diagonal wave count, but I have been using the simple count at this time.

If you notice how the horizontal lines get smaller as the bull market keeps running, then we know that just a little correction can send Amazon crashing hundreds of dollars in a very short distance. Just to get to the bottom trend line Amazon would hit the $600 price level.

One of the expensive Gold/AMZN ratios back in July 2017 was 1.16 and today we have about a 1.2:1 ratio. One ounce of gold will only buy 1.2 shares of  Amazon. I measured a cheap ratio of 25:1 at the 2002 bottom so I doubt we will ever see that ratio again. Amazon would vanish before that crazy low ratio will get hit again. In todays world anything can happen, so I never rule out anything even a 25:1 ratio.

We seem to be heading into a brick wall with our present ratios, and more than just a few times, so this can be a very bearish sign for Amazon.

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Amazon 2002-2017 Elliott Wave Count Review

I normally do not do wave counts on single stocks, but there are a few that are being held by many institutions, hedge funds and that have a broad exposure to the economy.  It can take a very long time following a stock, before any decent wave count can be used or even be reliable in anything more than a short term trade setup. 

When I saw this bull market it didn’t take long to see a pattern I could try. Once we match up the 2002 bottom, with the stock market bottom of late 2002, we can see two sets of corrections. The first correction being a wave 4 in Minor degree, followed by the 4th wave, in Intermediate degree. This Intermediate degree 4th wave correction was a flat, (3-3-5) falling back to the previous 4th wave of one lesser degree, which was Minor degree. 

I kept the 5th wave very simple, but in reality it fits much better as a diagonal 5th wave. 

  The last recorded high was $1017 with a very small inverted zigzag rolling around the top. The Gold/Amzn ratio hit about 1.6:1 which means you can only buy, 1.6 shares with one US gold ounce.  This ratio would have to compress even more, if the bullish phase is still going to extend much longer. Back down in 2002 when Amazon was a bit below $13, this Gold/Amzn ratio was about 25:1. Will it reach that ratio again? I have my doubts, but we have a target ratio that we can use for now.

There is a very high probability that Amazon is at a Cycle degree wave 3 peak as well, so this stock could fall much further than what the majority might be expecting. The Amazon bull market is also riddled with gaps, so I would expect that most of the high gaps still open, will get closed. I have about 5 open gaps below present prices, which seems to jump $200 at a time. Gaps at $600, $400, $200, $100 and one at $50, all can become strong turning  points. I think we can forget about the $50 gap, as the $200 price level is already below the start of the stock mania in 2011. 

The two parallel trend lines follow the Intermediate degree trend, so we should get a correction at least one higher degree, or even two degrees higher. Two degrees higher will mean a Cycle degree correction, with 3 waves in Primary degree.  

Amazon is getting too big and the government is talking about it – MarketWatch

I thought I would add this link as it also mentions Steven Jon Kaplan!

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Updated August, 2, 2017

 

This is a 10 day range of Amazon, including a spike to new record highs, after which it immediately started heading south.  It looks great as a start of another correction and I’m sure some bulls will try and buy on the dips, but he dips are going to much bigger than what the majority thinks. We could be heading to an Amzon bear market that may take 2-3 years to play out.

Just go back 8 years, and you will see many open gaps, right down to the $100 and even $50 price levels. You might not see these gaps on a weekly time scale, but we sure can see these gaps at the daily time scale. From the late 2008 bottom,  I counted about 6 open gaps, so any single gap can become a temporary stop.  The Gold/Amazon ratio also pushed 1.18 when I measured it today. This means that one gold Troy ounce will only buy 1.18 shares of AMZN. In the days when AMZN was cheap, you could buy 25 shares of AMZN with one ounce of gold. It would not surprise me if AMZN closed the gap at the $300 price level, but even then the $300 price level may not hold for long.

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