Amazon (AMZN) is trading a bit lower after its earnings report. But the stock is still in a good..Discussed in this article: Amazon.com Inc. ( $AMZN )
Here’s what I think about Amazon ( $AMZN Amazon.com, Inc. ). The company announced earnings earlier tonight after the market closed and the stock started trading down a little bit, not a lot so the stock is still pretty stable here. But if you look here, at this consolidation, you might just want to give up on the stock because, oh my gosh, there are so many stocks that are moving higher and Amazon ( $AMZN Amazon.com, Inc. ) is really not, and then this is it, and now this company, the stock is trading down so I don’t want any part of this.
Actually many, many, many good companies, if you really look at their charts, are doing just this, they’re actually consolidating, they’re not really moving higher, yet the market continues to move higher. This is why this is important, these stocks have been under performing because they’ve been consolidating, they have not been going lower, and listen to me here, I’m giving you pearls, I’m pounding the table on this one. The stocks that everybody loves, and no I’m not talking about Snapple, that’s Apple ( $AAPL Apple Inc. ) by the way, the stocks that everybody loves, a lot of them are just trading sideways. Again, they are not moving lower, they are forming what you call a high base, you know you see that term being used in “Investors Daily” a lot on they’re technical work.
So what happens when a stock breaks out of a high base? Well, all of the sudden the stock just continues to move higher, because, guess what? It was in a base, it had a nice basing pattern, so that move is going to be different than a stock, you know, that just trickled down like this and then just starts moving higher, there wasn’t enough time for the average cost basis for short-term traders to get down to this level, so instead every time the stock goes up you’re going to get people saying, “I want my money back.”
But here, because the stock is trading sideways long enough, then you’re going to get the average cost basis of traders right around the current level. So then when the stock starts moving higher, guess what those traders are going to be doing? They’re going to be saying, “Yippee, that’s why I bought the stock to begin with. Hey, I’m making money, let’s party.” And then the stock just moves higher.
If you look at Amazon ( $AMZN Amazon.com, Inc. ) you think about so many of these other stocks that are doing the same thing, I’m not going to point them out to you here, you just go flip through some charts, and members I’ve been talking about a lot of these, look at some of the home builders for example, that are doing the same thing. Once these stocks start to go, and a lot of these are real large cap companies, once these stocks start to go, what do you think is going to happen to the S&P 500? You think it’s going to tank? No! It’s been consolidating and continuing to move higher even as so many of these really, really good stocks, like Amazon ( $AMZN Amazon.com, Inc. ), continue to consolidate.
So I’ll go ahead and say it, at some point, and I think that point isn’t going to come to long from now, at some point I think this market is going to move appreciably higher, as soon as these stocks that are consolidating start breaking out to the upside.
That brings us back to Amazon ( $AMZN Amazon.com, Inc. ). I’m almost done here, here’s why; this is the only chart that matters to you. If you want to go flip around stocks, trading them up and down on a short-term basis, I mean that’s great. If you’re making money doing that, awesome, don’t do anything different, just do that. But here, on the weekly chart, if you’re just interested in owning stocks that are working, this is working for you; this is what I’m expecting.
So with that, it’s really all you need to know. Stocks been squeezing a little bit, yet again I’m telling you that if this stock starts moving higher it’s going to be doing the same thing that a lot of other stocks that have been in congestion are going to be doing, and that is going to suck the air right out of the top of the market and stocks are going to come up to fill that void, and that’s that.