AMZN Amazon Monthly Chart; Multi-Year Topping Behavior Continues

Business schools will be using Amazon as a case study for decades to come. The multi-year rally is spectacular and jaw-dropping. King Bezos sits atop a gold throne ruling over his loyal Amazon Prime groupies. As the Federal Reserve began goosing the stock market in March 2009 and 2010, to protect the wealthy class in America, AMZN was down at a hundo and change. Amazon took out the 2K level last year right before the Q4 2018 crash.

Investors and traders are so used to the non-stop move in the chart from the lower-left to the upper-right that they expect the party to go on forever. Nothing lasts forever. Keystone identified the stock market top last year as well as the tops in the heavy-hitter's such as Amazon. The red lines show the negative divergence that occurred as AMZN printed new all-time record highs. Down she goes.

As usual, the central banks step in to save the day and that occurred right out of the gate this year when the Fed panicked on 1/3/19. The stock market was toast so the global central bankers colluded and coordinated to save the day. The Fed, BOJ, ECB, PBOC and a host of other banks began making dovish announcements every few days forward creating the rally in stocks this year.

This summer, AMZN tries to make another run higher but it was not in the cards. The red lines show the drastic neggie d on that price match. Down she goes. The upper standard deviation band was violated so the middle band, also the 20-month MA, at 1740, and rising, is on the table and price comes down to kiss this level, as would be expected. The lower band at 1442 is on the table. The pink arrows show the bands squeezing in tight. Whoa, boy. There is going to be a huge move in Amazon over the coming weeks and months, however, the tight bands do not predict direction.

The purple box shows that the ADX has identified the long rally higher in price as a strong trend higher. However, the ADX is dropping like a stone as price languishes sideways the last couple years. The 30-31 level is key, ditto 26-27. Let's just say if the ADX goes sub 30, the strong trend higher on the long-term monthly basis is officially over. The Aroon green line was pegged at one hundo with nowhere to go but down while the red line remains at zero with nowhere to go but up (both indications are bearish).

The brown circles show distribution taking place. The smart money is handing off Amazon shares to the dumb money. Note how the distribution has increased from the Q4 2018 crash to present. Amazon is constantly hyped on the television, radio and internet so Joe and Jane Sucka, the bag-holdin' chumps, buy AMZN because the financial pundit in the custom-tailored Armani suit said Amazon is a sure thing. Timmy Trader is still bragging at the office water cooler that AMZN will rally higher back to the price he entered at above 2K.

AMZN is sitting at the critical 20-month MA support at 1740-ish and must make an important bounce or die decision. If the 20 is lost, the 50-mth MA at 1211 will be on the table for the months ahead. It appears that Scamazon's best days are behind it.

Interestingly, AAPL is printing new all-time record highs. The money flowing out of Amazon is obviously floating into Apple continuing to chase the hottest high-flying stocks. Analysts tout Apple's sales numbers and the growing services division as homerun's going forward and the reason the price is printing new highs. The Apple Watch is touted as a success. This is all garbage. Apple stock is printing new highs because the money that left AMZN. FB and NFLX is flooding into AAPL (rotation within the FAANG stocks; Facebook, Apple, Amazon, Netflix and Google (Alphabet)). GOOGL is also benefiting from the malaise in AMZN, FB and NFLX. It's not rocket science.

Young people must get ready for the pending recession. Many of you will lose your jobs. Those of you sporting an Apple Watch will regret it instead wishing you had the five hundo bucks to spend on food and rent as you toss the wrist gadget into the kitchen junk drawer. Amazon Prime users will diminish. In a recession, you will start pinching pennies. Monthly services and fees will be axed as family budgets are tightened.

Just think, in a few years, AMZN can easily be a 3 hundo to 1K stock. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Saturday Morning, 10/26/19:  AMZN eeks out a +0.2% gain during the week to 1761 continuing to sit on the 50-week MA support/resistance at 1755. It's bounce or die time. King Bezos laid an egg last Thursday evening when Amazon released earnings. Investors were yearning for more. AMZN crashed as much as -9% in late trading but recovered on Friday as dip-buyers are constantly tripping over each other to go long.