Amazon.com, Inc. (AMZN) is one of the top performing stocks in 2017, as the online retailer of almost any product beat all analysts' forecasts. Items are easy to find on Amazon's website and simple to buy with a click of a mouse on your PC or laptop, or using the Amazon App on your handheld device. During the height of record Christmas shopping, more than 4 million shoppers in one week became members of the company's Prime service.
The stock closed Tuesday at $1,176.76, up 56.9% year to date and in bull market territory at 57.4% above its 52-week low of $747.70 set on Jan. 3. The stock set its all-time intraday high of $1,213.41 on Nov. 27, which was Cyber Monday. (See also: Amazon Eyes Boxes in Effort to Cut Shipping Costs.)
Here's how the numbers worked in 2017
Amazon shares closed 2016 at $749.87, and my annual pivot was $753.79, which proved to be the buy level, as the Jan. 3 low was $747.70. The daily chart showed that the stock was above a "golden cross," which supported an opening buy for 2017. At mid-year, the stock closed at $968.00, and my semiannual pivot was calculated at $972.47. This key level proved to be a magnet tested many times until Oct. 26, when Amazon reported blow-out earnings.
On Sept. 29, the stock closed at $961.35, with a quarterly risky level targeting $1,121.35. The positive reaction to earnings on Oct. 27 had the stock pop to this level on Oct. 30, setting the stage for a positive move on holiday sales. The high of $1,213.41 occurred on Cyber Monday, Nov. 27.
At the end of November, with a close at $1,176.75, a monthly pivot for December formed at $1,174.82, which has been a magnet since then, and Tuesday's close of $1,176.76 was just above this magnet. (For more, see: Amazon’s Next Step: Reduce Reliance on UPS, FedEx?)
The daily chart for Amazon
Amazon has been above a "golden cross" since April 25, 2016, when it closed at $626.20. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. The horizontal lines show the semiannual pivot of $972.47, the quarterly pivot of $1,121.35 and the December pivot of $1,174.82.
The weekly chart for Amazon
The weekly chart for Amazon is positive but overbought, with the stock above its five-week modified moving average of $1,143.69. The stock is well above its 200-week simple moving average at $630.66 and has been above this "reversion to the mean" since the March 2009 low, when the average was $55.92. This set the stage for the huge gains since then. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 85.45 versus 85.48 on Dec. 22, so both readings are above the overbought threshold of 80.00.
Given these charts and analysis, it appears that Amazon stock will begin 2018 below new quarterly and semiannual risky levels, likely at $1,328.35 and $1,387.14, respectively, with an annual pivot of $1,173.14. This configuration provides a warning to reduce holdings by 25% over the next three trading days. (For additional reading, check out: Amazon's Holiday Dominance Is a Bonus for Investors.)