Jun 09

Amazon Consolidates after making a Fresh Record High

Amazon (AMZN) continues reaching a new all-time high backed by the e-commerce rally boosted by the lockdown and by the optimism triggered by the expectations of reopening of the activities that have pushed up the stock market.

The mid-term Elliott wave picture illustrated in its hourly chart exposes the decline that AMZN developed after the price reached its record high on February 19th, when Amazon found sellers at $2,185 per share. The massive sell-off occurred in the stock market, dragged AMZN, that lost over 25% from February 19th to March 16th. At that time, the price found fresh buyers at $1,627.15 per share.

 

Once AMZN found new market participants interested in pushing it higher, the stock price started to develop an impulsive sequence that carried it to strike new record highs climbing over 55% from March 16th to date.

The impulsive structural series observed in the previous chart, reveals that AMZN developed a third extended wave of Minute degree labeled in black. According to the Elliott Wave Principle, and considering that the third wave is the extended movement of the bullish cycle, waves ((i)) and ((v)) should be similar in terms of price, time, or both.

On the other hand, considering the alternation principle in corrective waves, we distinguish that wave ((ii)) in black is a simple corrective move, as its time elapsed for its completions is lower than the time spent in the fourth wave. The correction corresponding to wave ((iv)) is a complex corrective structure. In fact, the fourth wave of Minute degree labeled in black is a triangle pattern that remains intact.

Currently, the triangle pattern in progress moves in its wave (d) of Minuette degree labeled in blue, which topped at $2,529.90 per share on June 08th trading session corresponds to its record high.

This all-time high context added to the extreme bullish sentiment in news media, which looks confident that the stock market will erase the losses induced by the coronavirus crisis, leads us to maintain a neutral bias in the stock market. On the other hand, in the technical perspective, considering that the third wave of Minute degree is an extended move, the fifth wave is likely to fail in its attempt to strike a new record high.

In consequence, our preferred positioning remains on the neutral side until the fifth wave ends.