After a rally in a down market, you should always be cautious before entering into new positions. How can we tell which stock really should go up and which was just pretending?
To try and combat that, I like to look at stocks that were already in the process of developing a solid uptrend with some support below it. I think I may have just found it with Amazon (AMZN).
While we may have missed a few points, Amazon seems on the brink of making a run up into its normal stratosphere of the 80-90 level.
There are several ways to look at:
- The fibonacci tool shows the stock just breaking through the 62% retracement.
- There is a 5 month resistance that is about to be broken through.
- MarketClub gives it the green light with a green triangle.
Either way the stock looks like a buy. To be sure, the stock is clear of any downward movement, I would buy at $65. If you want to keep tight stops, then I would get out if Amazon falls below $63.
It seems like there is a lot of room for Amazon to run. I would keep an initial price target of $72.
