Monday, December 22, 2014

Amazon: If stock price breaks down, how low can it go?

Although anything is possible when it comes to the financial markets, there is currently a bearish case to be made for the future price level of Amazon stock. 

Within each of the three conventional time horizons, the prevailing price trends of Amazon shares are down.

In order for Amazon to overcome the prospect of future bearish reprisals, it must first rally above, and then sustain closes above the falling green trendline annotated with an up arrow in our chart.

If the stock price of Amazon fails to claw its way back up and maintain trade above the falling green downtrend line noted, it is quite possible that share values can take a rather large hit to the downside going forward.

In lockstep with the prevailing price trends, our trading strategies are short Amazon in each of the three-time horizons. We have provided the chart illustrated courtesy of the Chart-Cast Pilots Mid-Level (medium-term) speculative portfolio.

3 downside price targets with contingencies
  • Our first active downside price target for Amazon is $267 per share. This price target shall remain in force so long as Amazon maintains trade beneath its all time print high of $408.06. This target is currently active and defended via trade and closes beneath the gently falling red trendline so arrowed. 
  • Our second and most bearish downside price target of $162 per share is also set against (or contingent upon maintaining trade beneath) Amazon’s standing historic price high. In contrast to the first, this bearish target is not currently active. In order to reactivate the plausible vibrancy of this price target, we will need to see the price of Amazon breakdown and maintain closes beneath the near-horizontal red trendline arrowed with the associated $162 price target. 
  • Our last bearish line in the sand is the most recent, and does not yet have a price target associated with it as a breach of the trendline to activate and calculate the target has yet to trigger. At present, we have only a value of 50-pts associated with this bearish trigger, which is set against the most recent pivot high of $342.28, and so arrowed via the rising red trendline noted. 

A trigger and contingency for the optimists

To close on a positive note and to provide clearly defined cautionary boundaries for bears, the following will provide parameters for a plausible bullish outcome in the weeks and months ahead. 
If the bullish trigger outlined below elects and maintains its specified contingencies, such a maneuver will likely take the stock price of Amazon all the way back up toward retesting the all time highs.

So long as $284 holds as pivot low, we are citing a 60-pt buy trigger contingent upon a breakout and sustained trade above the falling purple trendline trajectory so noted.

Until Next Time, 

Trade Better / Invest Smarter


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