AMZN: The Short Squeeze

From September 30 on AMZN:

"The problem that The Bears have in AMZN is that yesterday's rally was the third move above the top of the pattern, and it also was the third CLOSE above the top of the pattern. The Bears are vulnerable to a squeeze here, especially if AMZN goes pounding through the 94.40-94.50 highs. They need to knock this back inside the channel."

From October 9:

"The Bears have a problem here with the CLOSE above 94.40-94.50 resistance and the top of the channel."

Oh, my! Huge problem for the AMZN Bears at today's open, but we could see that potential during the past few weeks ago when:

1. The Bearish Island Reversal high of 94.40 got taken out to the upside
2. The putatative Bearish Wolfe Wave wasn't bearish
3. The 94.40-94.50 "possible" Double Top got taken out to the upside

The AMZN November 95 Calls (.QZNKS) currently are up 389% on the day. Whew! I'm not fond of playing earnings or options, but that play certainly seems justifiable given the evidence.

SPX: Bullish Inverse H&S Target

August 23, 2009 3:34 AM:

"1085.24 has been IN PLAY since the May 1 technical breakout of the Bullish Inverse H&S. That breakout was successfully retested July 8 and 10 (refer to "Support at neckline of 4½ month Inverse H&S" on the chart) which, in large part, propelled us to the current level in the SPX."

The 1085.24 Bullish Inverse H&S target got MADE in the first few minutes of trading this morning.

PCLN & AMZN: Stop Busters Revisited

From September 30 on PCLN:

"Stop busters are (1) a takeout of the 169.00 high at Wave 5, and then (2) the top of pattern, which comes in today at 170.04, particularly a CLOSE above the latter...

PCLN reversed into the close, so The Bears using a CLOSE above the pattern got a break, but they sure had a knuckle-biter on their hands, intraday."

Both PCLN and AMZN give testimony to the difficulty involved with shorting in a bull market. PCLN sold off from its last attempt to get through the top of the channel, but it double-bottomed in the 158's and "it's ba-a-ack" in The Bears faces.

Wednesday was a new CLOSING high for the stock. Thursday was a CLOSE above the channel and a new high for the move. That's mighty tough on the shorts. Yesterday was a close back inside the channel so The Bears have some hope that a reversal to the downside has begun, but I get a little worried when I find myself "hoping" for something.

From September 30 on AMZN:

"The problem that The Bears have in AMZN is that yesterday's rally was the third move above the top of the pattern, and it also was the third CLOSE above the top of the pattern. The Bears are vulnerable to a squeeze here, especially if AMZN goes pounding through the 94.40-94.50 highs. They need to knock this back inside the channel."

The Bears managed to knock AMZN back inside the channel for a few days, but like PCLN, "it's ba-a-ack," and the 94.40-94.50 highs got taken out to the upside yesterday. That's the fourth close above the top of the channel, so as we've discussed before with this stock and with the SPX and MZZ, the top of the channel isn't acting as reliable resistance, as it should.

The Bears have a problem here with the CLOSE above 94.40-94.50 resistance and the top of the channel. They obviously need to knock AMZN back inside the channel again.

SVA: Rally To Resistance

From September 29 on SVA:

"SVA rallied off that 7.51 low, so it looks like Data Point #4 is in. The top of the Falling Wedge comes in today at 8.869. The slope of that trendline is 0.1911, so subtract that amount each session to watch for a possible technical breakout, or failure. It will come in on Wednesday, Sept 30, at 8.678."

SVA rallied toward the top of the Falling Wedge on Wednesday, but only made it to 8.62. Yesterday, it took out Wednesday's 8.10 low (Sell Pivot) then followed through to the downside.

PCLN And AMZN: Stop Busters

From yesterday morning on PCLN:

"Stop busters are (1) a takeout of the 169.00 high at Wave 5, and then (2) the top of pattern, which comes in today at 170.04, particularly a CLOSE above the latter."

Given the bullish chart and the momentum coming off the 21-day Kijun-sen (solid red line), I had a suspicion yesterday morning that they might try to bust some stops at the top of the pattern. They busted both 169.00 and 170.04 on an intraday basis, but not on a closing basis. I suspect that they hit the "hard stops" (Buy To Cover orders that actually were entered).

PCLN reversed into the close, so The Bears using a CLOSE above the pattern got a break, but they sure had a knuckle-biter on their hands, intraday.


Among my reasons for being suspicious about the stops in PCLN yesterday morning was the stop-busting action in AMZN a week ago. The Wave 5 Fakeout/Breakout on July 23 was a Bearish Island Reversal. Usually, those gaps don't get filled for awhile, if at all.

AMZN did have a significant selloff to the bottom of the pattern, but it held right there and came back in The Bears' faces. The bottom of the pattern was a good place to take at least some profits on short positions, especially when the stock held right there for three days, then rallied. There never are any guarantees with these things, and the rally off the bottom of the pattern is a great illustration of that.

The July 23 high was 94.40. The September 23 stop-busting high was 94.50. That sure looks like they busted some hard stops, given the fact that the takeout was just ten cents above the prior high.

The problem that The Bears have in AMZN is that yesterday's rally was the third move above the top of the pattern, and it also was the third CLOSE above the top of the pattern. The Bears are vulnerable to a squeeze here, especially if AMZN goes pounding through the 94.40-94.50 highs. They need to knock this back inside the channel.