A month ago, I took issue with a UBS downgrade of Amazon (AMZN) and tried to demonstrate how this analyst action and commentary could be twisted into a blueprint for a buying opportunity. At the time, I noted that a test of the November lows on a 13% drop could produce the 8% upside potential in AMZN shares that presumably existed before the downgrade – the price target dropped from $195 to $180. Sure enough (or amazingly enough, depending on your perspective), AMZN neatly retested the November lows as buyers stepped up and sent AMZN bouncing 12% since those lows. This move closed the gap-down that UBS’s downgrade created in February.
*Charts created using TeleChart:
Now that AMZN has closed the gap, it must now contend with resistance at the double-top around the all-time high of $192. Given the general stock market is essentially overbought right now (see T2108), I cannot project an immediate retest. However, I have to believe that his latest stubborn resilience is a bullish sign for an eventual run toward $200.
Be careful out there!
Full disclosure: no positions