Anticipating AMZN's Recovery Rally
by Mike Paulenoff
September 6, 2021 • 12:00 AM EDT
On August 11, Mike Paulenoff alerted MPTrader members to a significant upside reversal signal in AMZN.
Mike wrote that "the 500 point decline is nearing downside exhaustion," noting a preferred downside target zone of 3180-3200.
Fast-forward to August 20, when AMZN pressed to a new multi-month corrective low at 3175.76.
At that point, Mike wrote: "The new corrective low was satisfied amid a stair-step pattern that has the right look of completion, multiple momentum divergences, and a Daily DeMark reading of 9 (using Combo), all of which combine to 'warn' us that at the very least, a sharp reaction rally -- or the start of a new upleg -- is approaching fast. To gain upside traction, and to imbue the chart set up with additional confidence, AMZN needs to claw its way above 3230 on a closing basis to trigger initial buy signals in my work."
AMZN indeed triggered preliminary upside reversal signals at and above 3230 on August 23, and climbed to a high of 3527 on September 1, a gain of 11% above Mike's corrective target low.
Since then AMZN has stalled and pulled back to the 3475 area.
What's next for AMZN? A deeper pullback after an 11% recovery rally, or a resumption of strength?
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Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
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On Friday June 17, Mike Paulenoff posted an alert to MPTrader members about an emerging setup in AMZN:
AMZN is one name that pops out at me that should benefit from an initial and sustained correction in traditional energy and transportation costs. AMZN needs to climb above and sustain 110 for my work to generate a more confident technical signal, otherwise, I cannot rule out another loop down that tests and breaks key May-June support at 101.26 to 101.
Last Wednesday, prior to the official FOMC rate hike of 75 bps, Mike Paulenoffwarned MPTrader members about the likelihood of additional weakness in the beleaguered home builders, writing about the ITB (iShares US Home Construction ETF):
In that, neither my pattern work nor my intermediate-term Momentum gauges offer much technical confidence that ITB will be able to carve out a meaningful corrective basing area in and around 53.
Back on May 13, amid a thrust in the price of Crude Oil from $95/bbl to $112/bbl, Mike Paulenoff alerted MPTrader members to an actionable technical setup in energy producer PSX (Phillips 66), writing:
My work has been extremely friendly since the beginning of May, looking for PSX to break out of its 11-month corrective accumulation pattern that will trigger a thrust towards a potential target zone of 110-115.
On Thursday May 19, in the midst of some serious weakness and carnage in the retail sector that had equity market-watchers doubting the resiliency of the almighty US consumer, Mike Paulenoff turned MPTrader members attention to PARA (Paramount Global), writing:
For the past 5 months, we could make the technical argument that PARA has carved out an accumulation-base formation that attracts buyers every time the stock dips beneath 29.00. We can also make the case that every time the stock climbs above 36.
On March 11, with AAPL in a month-long down-leg and trading at 156.34, Mike Paulenoff posted a relatively bullish analysis for MPTrader members, writing:
I am watching AAPL more closely than usual these days, as a bellwether for the health/vulnerability of the overall market.
