A Bear Market for This Stock? Really?

On Thursday, we took a look at WMT and concluded it was headed lower in the short term.

For today’s chart of the day, we’re going to take a look at Amazon.com, Inc. (AMZN).

AMZN is the second-largest retailer in the world, as well as a provider of off-premises storage and hosting for consumers and businesses around the globe.

It’s hard to believe, considering the massive runup it’s had, but AMZN is actually close to entering a bear market.

Let’s look at the definition of a bear market, as per Investopedia.com:

Individual securities or commodities can also be considered to be in a bear market if they experience a decline of 20% or more over a sustained period of time — typically two months or more…”

Let’s do the math according to those rules. The 52-week high for AMZN, which we saw only a few weeks ago, is $3,552.25. If we take 20% off that number, we’re left with $2,841.80. If AMZN trades there, it would be officially entering a bear market.

Let’s take a look at the daily chart of AMZN below and see how close we are to hitting that level:

chart

As we see, there’s still 6% to go from here until we hit the official bear market level for AMZN. Before we get there, there’s support sitting from back in July, which has to be broken. The move off that support was good for 17% in a few months, so the buyers may come in and defend that level.

And without further ado…

It’s time for the day joke of the week!

One windmill asks another, “What’s your favorite kind of music?”

The second windmill says, “I’m a big metal fan.”

Trade Smart,

Michael Saul
Analyst, Chart of the Day

Michael Saul

Written By Michael Saul

Michael Saul has been trading the financial markets since the mid-1990s. He head first into studying price charts, devouring everything on technical analysis that he could get his hands on. Then, he moved on to trading stocks in 1999, and started trading options in 2000. The one thing he’s discovered through it all is you can never stop looking for new ways to gain an edge in the market.