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.