When and Where to Place Your Amazon Stock Purchase Order

Before you think worrisome-looking headlines of late are sure signs of bigger and more bearish things to come in Amazon.com (NASDAQ:), think again. Better yet, look again at the price chart and be ready to buy Amazon stock on pending positive developments in shares. Let me explain.

Amazon’s Profits Are About to Surge -- Here’s Why

Source: Shutterstock

It’s been a couple difficult weeks for headlines at Amazon. The diversified tech giant is at the center of antitrust investigations by U.S. authorities. Not that it’s alone. Fellow tech giants Alphabet Inc (NASDAQ:), Apple (NASDAQ:) and Facebook (NASDAQ:) are facing the same legal heat over collectively hindering competition for consumers and other businesses alike.

The better news? While proceedings in the House are , it goes without saying that when the government is involved, change if any, isn’t going to happen overnight. As well, if action by lawmakers is taken, it could prove beneficial to Amazon stock. A breakup of the company might yield shareholder value as the sum of the parts could be worth more than if Amazon remains intact.

The other headline making the rounds is Amazon stock had to bow to a business defeat this week. Tuesday it was announced the company was exiting the food delivery service business after three-plus years of testing the waters in select U.S. markets.

The withdrawal should spell good news for the likes of Grubhub (NYSE:) and other industry operators like Uber (NYSE:). But let’s face it, if Amazon wants back into the market, acquiring its diminutively-capitalized competition would be pocket change for the tech giant. And back to the sum of the parts argument? Needless to say, it’s even less to lose sleep over.

Amazon Stock Monthly Chart

Betting against Amazon stock over the last decade has worked at times. But as the monthly chart illustrates, buying after corrective moves as shares reassert their strength or picking up AMZN stock on weakness, has proven the much better play. It’s a bullish trend I’m unwilling to discount right now. That being said, I’m not a buyer of shares at current levels either.

For the time being, waiting to buy Amazon nearer to technical support or purchase AMZN on a pattern breakout makes sense. On the monthly we can see shares have formed a corrective cup pattern. After finding support from its 50% retracement level tied to its 2016 corrective low, Amazon stock has been consolidating the past couple months in the upper half of the base.

Overall the pattern construction in Amazon stock looks bullish and sets up another potential base to rally from. As much and with AMZN’s stochastics at oversold levels, buying Amazon stock on a pattern breakout through $1965 or roughly 6% above current prices makes sense.

Alternatively, buying AMZN shares on weakness near technical support might be watched as well.

After six days of higher highs, a pullback in Amazon stock is likely in order. But be careful. Given the monthly chart’s consolidation, any weakness should be brief. I’m thinking a couple to maybe several sessions at most. As well, with the recent low critical to the pattern’s development,  staying long AMZN if a potential technical failure is confirmed looks like an awful business plan, both off and on the price chart.

Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter and StockTwits.

The post appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Options Videos


    InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers.

    Learn More