Amazon is the unmatched juggernaut over the last decade. King Bezos sits on a golden throne and sleeps on bags of money. Lazy humans want everything delivered nowadays since they view their time important. The malls are ghost towns as shopping online is now fully embraced in society. Social internet using the Facebook, Twitter and Google (Alphabet) platforms is accepted among the population. The stocks delivering technology lead the way. It's a Brave New World.
The coronavirus (COVID-19) pandemic hits at the start of this year creating economic destruction in its wake. Restaurants are going bankrupt. Small businesses, forced to close, are now belly-up. Large chain stores, like WMT, where the wealthy elite own stock, are protected and the population is told to use these stores more. Isn't crony capitalism great? Ma and Pa go under. Amazon is a big winner due to the covid pandemic. The AMZN price move is parabolic this year.
The purple arrows show the tight standard deviation bands that forecast a big move pending but do not predict direction. Both tight band squeezes, the one in 2015 and the other in 2019, shot price higher. What's not to like, right? Wrongo. Amazon, like so many other charts, is placing its long-term top (months and years). Every talking head on Wall Street says Bezos is king and let the Amazon cash register ring; go long. The long-term tops in the US stock market are all that more guaranteed since no one sees them coming. And rock 'n roll, not Bezos, is king.
The AMZN monthly chart above is the same chart and technical analysis for NDX, FB and AAPL.
The red lines show the negative divergence across all indicators except the MACD line (green). Price is out of gas to the upside except for some MACD fumes in the fuel tank. The red candlestick for last month, September, appeared because price prints a matching high and the indicators were all negatively diverged. AMZN receives the neggie d spankdown, however, it does not have much juice lower due to the long and strong MACD that wants price to come up one more time on the monthly basis.
The uber high MACD readings are consistent for all the tech high-flyers. These MACD levels are unheard of; nosebleed heights. The MACD has nowhere to go but down. However, for that MACD line to come down, AMZN may need a jog move in price (one month down and then one month back up). This would then create neggie d for the MACD and the long-term top would be cast in concrete. Thus, AMZN begins falling anytime and moves sideways to sideways lower for months and perhaps a couple years or more forward, or, price chops sideways this month, and in November and tops out on the long-term basis late November or December. At any rate, the swan song for Amazon, and NDX, AAPL and FB, is playing in the background. Every market enthusiast leaps from their computer chair, the squeaky chair with arm pads held together with masking tape, shouting, "Blasphemy!" Well, don't kill the messenger.
Why would Scamazon sell off? Maybe it is simply priced to perfection with current and future goodness worked into the numbers. Maybe the increased business due to covid is already priced in. Maybe no one has thought about the extra costs that come with more business. More employees, more problems. How about Congress? The politicians have declared open season on Silicon Valley nerds in fleece vests. Companies like AMZN, FB, GOOGL, TWTR and others have red bullseyes on their backs and will serve as Congressional whipping-boy's in the future. Also, price is obviously over extended a long time and requires a mean reversion lower.
The Aroon displays the ole Wall Street adage that 'markets can remain irrational longer than you can remain solvent'. The green bull line is overbot but this has continued for a decade; ditto the red bear line that is oversold for a decade. If shorting AMZN, you would have lost your shirt long ago. However, those lines will cross in the future which portends bad things ahead for Bezos's billions.
Price has violated the upper standard deviation line so the middle band at 2243, and rising is on the table; ditto the lower band at 1066. Don't laugh. Price will eventually return to below the 200-month MA. The pink box shows the ADX verifying that Amazon is in a strong trend higher from 2016 through 2019. The road is more difficult now and despite the parabolic move higher in price this year, the ADX is not impressed and still trying to decide if it wants to call it a strong trend, or not. The brown circles show the distribution months and they have been relatively consistent over the years. Investors do not want to give this stock up; which means that when it begins falling, it may fall hard.
If you enjoyed big profits in any of the tech stocks, most with the same chart set-up as above, scale yourself out. It would be best to simply sell and walk away but if you remain bullish, sell one-third of these tech positions now, one-third as November begins and the last third at Thanksgiving. Keystone is not shorting any of the tech stocks mentioned above although is scaling into short positions in semiconductors.
Also of interest is the tickers not mentioned above; GOOGL, MSFT and NFLX. The GOOGL and MSFT monthly charts are the same as AMZN above, however, their MACD lines are not up in the stratosphere but instead still ramping higher. This hints that Google (Alphabet) and Mr Softy will top out a little bit after Amazon, the NDX, Facebook and Apple. For NFLX, it is cooked on the monthly chart right now. Ditto the weekly chart. You can short NFLX stock here forward.
You are watching a historic long-term top play out in the stock market between now and EOY and perhaps a bit into January or so. How cool is that? We have traveled to the mountaintop, as Martin Luther would opine, enjoy the view because it will not last long. NFLX leads down now on the monthly basis followed by NDX, AMZN, AAPL and FB, and then followed by GOOGL and MSFT all likely topping out by the end of the year and then trailing lower for months and perhaps several years forward.
The NDX weekly chart right now is a beautiful double-top pattern with universal negative divergence; the Nazzy 100 should trail lower on the weekly basis going forward and then you can see if the chart has topped-out on the monthly in November, if not, it will be December. No one sees what is coming down the road. Investors are concerned about different presidential election strategies and how markets will move. That is all a waste of time. It does not matter which corrupt silver-haired white guy wins the presidency in 18 days, the stock market is going to go down regardless. Good luck to all. 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.
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