AMZN And TIE

AMZN broke out of a wide base (middle of the chart) early this morning. Often after putting in a high after that kind of run-up, a stock retraces 50% of the rally, then continues higher. AMZN pulled back and looked to be holding up very well near the 50% retracement level, so I bought it for a quick play. It rallied much more than I expected.

Earnings came out after the closing bell, however, and the stock was down as much as $20. As I've said many times in the past, earnings can go either way and I usually like to be flat heading into the report. In this particular case, I'm VERY glad to be flat AMZN. Yikes!



TIE had a sizeable give back after it broke out. These wedge patterns often are like that. Yesterday, it came on strong again. Today, it pulled back to the last Buy Signal at 18.70 basis the fibonacci RSI's, so I bought it. Upside targets on the chart still are IN PLAY.



AMZN gain: just under $1,200

AMZN: The Selloff

From January 20:

"AMZN rallied to the last of our upside targets, 191.50 (it got to 191.60), then sold off yesterday. Another of many examples why it's a good idea to "take at least 'some' profits when targets get MADE."

Update:

That final 191.50 target ended up being just ten cents below the recent high, prior to the selloff the past few days. AMZN has been trying to find some support here and put in a very narrow double bottom, or "W-bottom" early yesterday morning on the intraday chart and a possible Bullish Hammer on the daily chart.



After breaking out of the narrow Double Bottom early in the session (horizontal white bar), AMZN rallied to 177.00, then formed and broke out of a Symmetrical Triangle. After the breakout, it came back and successfully tested the breakout (first white arrow), then rallied again. Another triangle formed after that. I got in at 177.00, near the second white #4 and got another breakout to the upside and another successful retest of the breakout (the second white arrow). So far, so good.

AMZN rallied to 177.88 and looked like it would get to the short-term pattern targets at roughly 178.25 and 178.40, but we can see that the rallied fizzled going into the close.

177.13 was the low of the successful retest of the second triangle breakout. That "shouldn't have" gotten taken out, but it did, so I stopped my trade out right there.



Gain: $100. Paltry, but the patterns were there and the trade had a chance. Sometimes trades work and sometimes they don't. When they don't, stop it out and go back to the drawing board ;)

AGU - Resistance Levels

(Friday's trading is the right half of this 5-Minute chart)

From Friday morning:

"If, for example, they paid 89.62 for the stock and AGU rallies $2.00 to that price today, they will be thinking, "Okay, I can get outta this thing at a break even" and they will sell. That kind of selling causes RESISTANCE to upward movement in the price of the stock, particularly after it just has broken down."

Update:

We can see from the intraday chart that AGU opened higher at 88.98, three cents below Resistance Level 1, at 89.01, raced toward Resistance Level 2, then swooned immediately and went all the way back to Thursday's close. AGU mounted another rally attempt to Resistance Level 1, 89.01, but failed to get thru it and sold off going home. Players who didn't sell Thursday's breakdown at 90.65 (the top of the Falling Wedge in green), or below the low of the wedge (89.01) wanted out of it.



Although AGU closed higher on the day, it closed back below 89.01, the low of the Falling Wedge at Green #4. That low "shouldn't have" gotten taken out to the downside last Thursday, but it did.

Agrium (AGU) - Support Levels

All four stock that we look at yesterday morning went down in the general market selloff. When that occurs, we want to look for possible levels of support. If a stock is in a downtrend and there are only weak levels of support, or no levels of support, the stock is extremely vulnerable to getting hit very hard.

Review of Agrium (AGU):

1. In November, the stock broke below the neckline (upward sloping blue line) of a Head & Shoulders Top. When stocks break down, they tend to go down a lot faster than the time that it took for them to go up. AGU got to the H&S Top target of 78.26 in only 3 days.

2. After a selloff like that, a stock needs to settle down and try to establish a base from which to launch another rally, if it can, which is what AGU did from mid-November to mid-December. After it broke out of the Bullish Falling Wedge (sharp downward-sloping blue pattern) on December 16, it gave a number of Buy Signals basis the Fibonacci Sequential measures of Relative Strength that I use. Those Buy Signals are the horizontal green lines. They were resistance before they got taken out to the upside, so they now become possible levels of support.

3. After AGU broke out of the Bull Flag (the pattern in green) on January 12, 2011, it got to the 95.00 target, which was the top of the pattern, then sold off into Wednesday's close. The top of the pattern (Green Trendline #1-#3)"should" act as support on any selloff, and it did hold on a closing basis on Wednesday. That trendline was at 90.65 yesterday. AGU gapped down below it at the open, rallied to 90.66, just a penny above it, then in the first 5 minutes of trading it also took out the 89.10 low of the pattern at Green #4, 89.01. That's the horizontal red line.

4. When the low of a pattern that has broken out to the upside gets taken out to the downside, any remaining targets that were IN PLAY are CANCELLED. The outstanding target of 97.45 from the Bull Flag breakout might be achieved down the road, but as the chart stands right now, a play for that target was technically stopped out on the break below 89.01, which was the low of the Bull Flag.

89.01 now is the first level of resistance to be broken through on any rally from here. The reason for that is because players who recently bought AGU during the formation of the Bull Flag and who still are holding the stock had a nice gain when it broke out to the upside, but if they didn't "take at least 'some' profits when the 95.00 target got MADE," they all are sitting on a loss and are possible sellers if they get can out of their postion at a better price than yesterday's close of 87.62. If, for example, they paid 89.62 for the stock and AGU rallies $2.00 to that price today, they will be thinking, "Okay, I can get outta this thing at a break even" and they will sell. That kind of selling causes RESISTANCE to upward movement in the price of the stock, particularly after it just has broken down.

GS, AMZN, AGU And TIE

When targets get MADE, that doesn't mean that a stock is going to reverse right there and go in the other direction, but that often is the case, as it was with Goldman Sachs (GS) and with Amazon (AMZN) yesterday.

After the 174.80 target in GS got MADE, it rallied only a little bit more, to 175.34, then gapped down yesterday on disappointing earnings, below the recent Cup & Handle breakout (blue horizontal trendline).

When GS gapped to the upside on January 3, 2011, it left a gap in the chart (the two horizontal green lines). GS came back and filled that gap, then broke out again and the 174.80 target got MADE. That was very nice, technically. Yesterday, however, in adddition to breaking back below the breakout, GS also took out the low of that little gap-filling black candle. UGH. When technicians say, "Some technical damage has been done the chart," this is an example of what the mean. Instead of the blue breakout trendline and the two green horizontal bars being support, they now are resistance because players who thought that they bought a successful gap fill and another upside technical breakout find that they haven't, and many of them will be inclined to sell on rallies back to the gap-filling candle (green horizontal bars) and what currently looks to be a failed breakout (the blue horizontal bar).

GS needs to close back above the breakout to turn this chart bullish again, which might prove difficult. Yesterday's selloff was on heavy volume and the candle is a long black one, closing near it's low, suggesting that players threw it in going home.



Like GS, AMZN rallied to the last of our upside targets, 191.50 (it got to 191.60), then sold off yesterday. Another of many examples why it's a good idea to "take at least 'some' profits when targets get MADE."

This chart looks much better than Goldman, however, because rather than closing below two levels of support as Goldman did yesterday, AMZN has at least three possible levels of support below it, and still is well above the two pattern breakouts that we've discussed. Possible support levels are listed on the chart.



Agrium (AGU) has been one of many stunning performers off the November, 2008 Bear Market low. It's up over 300%. AGU broke out of this Bull Flag (patten in green) on January 12, leaving a gap in the chart from its January 11 close of 90.91. Yesterday, AGU retested the upper trendline of the breakout and also filled the 90.91 gap. That trendline comes in today, January 20, at 90.65. A little intraday dip below that would be fine, but I shouldn't like to see a CLOSE below that trendline.



On January 18, Titanium Metals (TIE) rocketed out of this big Falling Wedge (pattern in blue) on a Breakaway Gap, also taking out the recent highs of 18.89 and 18.85. That got "called back" yesterday, much like a long completed pass does in football when someone is off sides ;)

In yesterday's selloff, most of the gap from the January 14 close of 18.30 got filled (yesterday's low was 18.41) and the Falling Wedge trendline got retested. 18.30 might get filled here, but as long as the trendline holds up, TIE looks like it has some further upside.

AMZN Targets

(Click on Charts to Enlarge, then click the back arrow to get back to the narrative. You can toggle back and forth).

From yesterday morning's post:

"...the stock gained some steam at the end of the week and rallied Thursday and Friday, almost getting to the 189.39 target (from the pattern in blue). That's still IN PLAY, and 190.32 also is IN PLAY from the breakout of the pattern in purple."

Update:

Both the 189.39 and 190.32 targets got MADE early in yesterday's trading. The high around 10:30 AM was 190.40, just above the second target.



From the 190.40 high, AMZN formed a Falling Channel/Bullish Falling Wedge, which "morphed" (changed) into a Bullish Inverse Head & Shoulders pattern (picture an upside down bust of a person). The neckline was a very flat 190.13 and 190.14. The low of the pattern was 189.43. Subtract that low from the neckline, and you get an upside target of 190.83 IN PLAY. I bought AMZN at 189.90 and sold it at 190.78 in front of the 190.83 target that got MADE. The session high of 191.00 at that point was just above the target (White #1 in the next chart).



Basis this 5-Minute chart, by mid-afternoon, AMZN had formed this nice Symmetrical Triangle (pattern in white), which dwarfed the Bullish Inverse Head & Shoulders pattern, by comparison (the pattern in yellow). The breakout put a measured move target of roughly 191.50 IN PLAY (hard to measure exactly on these intraday charts). I bought AMZN again at 190.22 and sold it at 191.44, just ahead of the 191.50 target, which got MADE. The session high was 191.60. The close was 191.25.




Gain on the two trades: $2,000.

My "stop loss" if the patterns had failed was the low of the Right Shoulder in the 1-Minute chart, and the low at White #4 in the 5-Minute chart of the Symmetrical Triangle. If a trade goes wrong, whether it be a day trade or a position trade, admit it as quickly as possible, take the small hit and move on to the next trade. We never want to allow a losing trade to turn into a disaster, which I did so-o many times in the past. UGH!

AMZN - 100% Rally

Since gapping up from the low $90's the last time we looked at AMZN (See "AMZN: The Short Squeeze" two posts below here), the stock has rallied 100%. (Click on charts to enlarge, then use the back arrow to get back to the narrative).



The high of the rally from short squeeze off the low $90's was $147.63 in April, 2010. Brutal for the shorts. From that high, AMZN went into a consolidation phase and formed a lovely Bullish Inverse H&S pattern during mid-2010, seen in the next chart). That pattern broke out to the upside on September 1, 2010 and the target of 156.00 got MADE in parabolic fashion (straight up, with almost no pullback). That's how stocks "should act" when they break out of a nice base like this one, but as we know, they don't always ;)






AMZN then formed and broke out of a Bull Flag (small pattern in blue). The target of 170.45 got MADE with no problem. The stock went on to form a Rising Wedge pattern in the Autumn, 2010 (pattern in black). AMZN broke down from that pattern, but quickly gained its footing and rallied to a recovery high of 181.84 (Blue #1) in late November, 2010. From there, two patterns have formed (the one in blue and the one in purple) and broken out to the upside.

Notice the dip below the top trendline of the pattern in blue, at Purple #4. That's a Bear Trap. It looks like the pattern in blue has failed, inviting the Bears to short the stock (play it to go down), but that proved to be the fourth leg of another pattern (Purple #4), and the stock broke out again to the upside on the first trading session of 2011.

Since that breakout, AMZN has tested the mettle of the Bulls while repeatedly retesting that breakout (Purple Trendline #1 and #3), but the stock gained some steam at the end of the week and rallied Thursday and Friday, almost getting to the 189.39 target (from the pattern in blue). That's still IN PLAY, and 190.32 also is IN PLAY from the breakout of the pattern in purple.

Goldman Sachs (GS)

I've been following Goldman(GS), with interest since it crashed in April, 2010 wondering how it would fare afterwards. We've referred to this stock in the past as "the stock that refuses to die," and we can see from the chart that it hasn't expired just yet ;)

In July, 2010, it broke out of a Bull Flag and the upside targets of 146.40 and 156.81 got MADE with no problem. That looked encouraging for the bulls, and indeed, it was the beginning of a move to the upside into the current time-frame.

In mid-October, 2010, Goldman broke out of another pattern, a triangle, which put an upside target of 174.80 IN PLAY, with a target date of roughly December 20,2010. That would be the same number of days from the breakout that it took the pattern to form. When a target takes longer to achieve than it took the pattern to form, it becomes questionable whether or not it will be achieved at all.

Goldman didn't make the target by the anticipated date of Decemmber 20, but by that date, it wasn't showing any problems. It was sitting at the bottom of the handle of what looks to be a Cup & Handle formation (pattern in blue).

The Cup & Handle broke out to the upside on the first session of 2011, putting another upside target of 185.99 IN PLAY. In "fractal-like behavior," (repeating pattern) it closed back below the breakout for two days, suggesting a possible failure, just as it did when it broke out of the triangle back in July, 2010.

On January 12, 2011, Goldman broke out to the upside again, and on January 14, 2011 the outstanding target of 174.80 finally got MADE.