Our Post-EPS Scenario for AMZN Turns Out Correct

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%.


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