Boston, MA 09/17/2014 (wallstreetpr) – Amazon.com, Inc. (NASDAQ: AMZN) (Closed: 327.76, Up: 1.19%) had a good day on the exchange and with the Alibaba IPO causing a selloff in most of the tech stocks nowadays, that is a tough thing to achieve. Then it must be admitted that AMZN didn’t survive the selloff entirely as it bounce on Tuesday only after a two week drop from the September high of $349.38. The candle formation turned out to be a Bullish Harami, which require further confirmatory price action in the next session. The volume has totally dried up in the recent weeks, dropping to 3.26 million on Tuesday against an average of 3.63 million.
Generally, volume dries up when the price is moving sideways to take a pause before resuming the trending move or contracting in a triangular fashion. Contraction is the case here as no higher highs or lower lows has been registered since the March 2014 high of $383.11. The 2-day low of $319 has been very close to the lower trendline of this triangle, which currently stands at $317. The boundaries of the triangle must be broken to make a significant trending move and increase participation, which will come only below $317 or above $357.
The long term chart shows the major bottom at $34.68, made in late 2008. The subsequent rise has been mostly contained by a perfect channel, which provided excellent support till 2012 and then an acceleration of the momentum shifted the lower boundary. The result turned out to be the existence of a long term support in $300-$304. The spike on the upside seen in 2013 may mark it as a third wave, going by the Elliott Wave theory, suggesting another leg of the upside is left. If that comes true, then the stock should be bought in any dip near $300 and held patiently for a new high above $408, hopefully much higher.