Don't Ignore This Chart

Amazon Makes a Threat

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Amazon is lagging the Nasdaq 100 ETF (QQQ) and the broader market over the last two months because it has yet to clear its January high and remains below the 200-day SMA. This is part of the reason the Invesco Momentum ETF (SPMO) is underperforming the Invesco Minimum Volatility ETF (SPMV). AMZN accounts for 8% of SPMO. Also keep in mind that Amazon accounts for a whopping 22.73% of the Consumer Discretionary SPDR.

Despite some recent underperformance, the stock made a move this week and challenged the January highs. Yep,  Amazon is threatening a breakout. The stock surged with the broader market from late December to mid January and then stalled in the 1575-1750 area the last eight weeks. Within the consolidation, we can see a downswing the first three weeks and an upswing the last eight weeks. A breakout at 1750 would put AMZN back above the slightly rising 200-day SMA and argue for higher prices.

The indicator window shows RSI meandering around the 50 line the last two months. On the positive side, this momentum indicator did manage to hold the 40-50 zone from late January to March. On the negative side, upside momentum remains weak because the indicator has not been above 70 since early September. At this point, I would consider the cup half full (bullish) as long as RSI holds above 40. A break below 40 would show weakening downside momentum and this would be negative for Amazon.


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- Arthur Hill, CMT

Senior Technical Analyst, StockCharts.com

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill


Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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