Our Post-EPS Scenario for AMZN Turns Out Correct
by Mike Paulenoff
July 25, 2014 • 12:00 AM EDT
On Wednesday, we noted Amazon (AMZN) was vulnerable to serious weakness, and we all know what happened after it reported earnings Thursday evening.
Here’s what we wrote: “As AMZN approaching earnings Thursday evening, it is up against some serious technical challenges. Let’s notice that the post-May advance has retraced exactly 62% of the Jan-May correction, which means that 360-365 represents stiff resistance to any further strength. That said, at yesterday’s high of 362.93, AMZN had climbed 28% off its May low in a pattern that exhibits recovery recovery rather than ‘new up leg’ form.
“If my pattern analysis proves reasonably accurate, then AMZN in fact is nearing the completion of a three-month recovery rally in an incomplete larger, still-developing intermediate-term correction off its January 2014 all-time high at 408.65, ahead of another down-leg that should revisit and likely break below 284.38 in the weeks/months ahead.
“At this juncture, only a positive and sustained reaction to EPS that hurdles 365 will argue for a run at 380 next. Any other post-EPS scenario will leave AMZN vulnerable to serious weakness.”
Amazon closed the week at 324.01, down 34.60, or nearly 10%.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts
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