AMZN Amazon Weekly Chart; C&H; Overbot; Negative Divergence Developing

The C&H (cup and handle) pattern mentioned 3 weeks ago for Scamazon continues on its merry way. Tech stocks are on a big run higher, the Nazzy 100 is an orgy, the AI hype is off the charts, chips are bid higher, and AMZN, AAPL, NVDA and other big players continue higher one fool buying off the other fool.

The bottom call in AMZN as the year began was easy-peasy as the green lines show. All the indicators were positively diverged so price was loaded up with rocket fuel and on the launchpad. Stochastics were oversold, as well as the RSI near and previously at oversold levels, both agreeable to a recovery move higher. The Aroon green circles show that at the bottom in price, bearish traders (red line) were at their maximum and bullish traders (green line) were also convinced that AMZN would simply continue lower. It is a contrarian indicator and price bounces from all this positivity to begin the year.

The C&H pattern forms with 103 head and 84 bottom of the cup so that is 19 points. Adding 19 to the breakout brim level of the cup at 103 is 122 upside target. Keystone's 80/20 Rule says 8's lead to 2's on the way up and 2's lead to 8's on the way down. Thus, pay attention to 118 because a move higher and couple days of closing above 118 tells you that 122 is likely.

The red lines show neggie d in play. The MACD line and stochastics, however, remain long and strong wanting another high in price on the weekly basis. Amazon is close to topping-out on the weekly basis but not yet. It appears the timing is in sync with the debt ceiling talks that are ongoing between the corrupt demopublicans and republocrats on crony Capitol Hill. The stoch's are overbot and agreeable to a pullback so even though the line slopes higher, she will probably top out over the coming days and couple weeks.

The MACD line likely needs a jog move (down-up) to put her into negative divergence. Price is soggy to begin this week, hence the red candlestick, and displaying neggie d as described. The Aroon also shows that the bulls are completely confident that Amazon will continue far higher and the bears are also convinced that the bulls are right. Aroon is a contrary indicator so it is telling you that the price action is toppy on the weekly basis.

What does all this mumbo-jumbo mean? Amazon may be soggy this week but the long and strong MACD line says another high is ahead on the weekly basis probably the first few days of June as the debt ceiling deadline comes to a head. At that time, check to make sure the MACD goes neggie d as price makes the matching or higher high, joining the other indicators in negative divergence, and if so, you can call the top in AMZN on the weekly basis. A multi-week downturn will then begin as price receives the neggie d spankdown.

For now, she is not there yet. Watch 118 since that may paint the way to the 122 C&H target. If bearish, you want price to tag 118+ and the MACD line to show neggie d and the top in place. The next week or two will tell the story.

Keystone is not in AMZN long or short. Best to wait a week or two and watch the chart as described. The low put/calls and utilities collapse tells you bigtime selling in stocks is at hand and will begin anytime forward (probably 150 to 400 points of downside for the SPX). Stay alert if long stocks because you may only be wearing a loin cloth a couple-three weeks from now.

As soon as the MACD line goes neggie d and joins the other chart indicators, the top is in on the weekly basis, probably anytime over the next 2 weeks. You can use this same analysis for the other high flyers like NVDA and AAPL. When the weekly chart goes neggie d, you can look at the 2-hour chart to time an entry for the short side. 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.