AMZN looks ripe to correct

AMZN may retreat to retest 209, the previous resistance as its support soon

AMZN bullish breakout

After 2.5 month 31% down trend, and 2.5 months of side-way trading, AMZN rose 4% today with heavier than average volume with no significant news while broad market is down.

The fact that this rise happens when AMZN hovers around 50 DMA for a couple of weeks and 50 DMA is slightly tilting upwards increases the credibility of this action and the possibility that this action leads a new short-term trend.

On downsides, at 141 trailing PE, it's trading at very high premium; AAPL, the tech sector leader and heavy weight is doing a parabolic rise lately, whose potential fall will lead to a crash in broad sector.

Possibility of a short term trend to retest all-time high $246: 60%
Possibility of a fake-move: 40%

AMZN and BIDU target price

AMZN and BIDU both experienced stellar bullish run since November 2008, however, just like Netflix, stocks go up and down, both stocks have pulled back recently, and the magnitude of these pull backs indicate their bullish runs that lasted for 3 years are over.  For AMZN, it dropped from 245 to 170,  my gut feeling is that it will go sideway for sometime at around 170 price level, then go up to above 200 level, go sideway for a few months, then go down again dropping through 170 towards final price target of this down trend which is 122, I estimate the time of reaching that price target is October - November 2012.  For BIDU, the chart looks uglier, it looks the price target is around 40 level in just a few months time frame.

S&P 500 and Amazon Inc. (AMZN) Chart Analysis

Early last July, S&P 500 and AMZN both ended their correction and started their 1st leg up, after 5 leg run up, S&P 500 were up 33%, AMZN was up almost 90%.  Interestingly, AMZN ended the run-up in mid-Jan, one month earlier than S&P 500.

S&P 500

AMZN

Amazon.com Inc. (AMZN) scenario and chart analysis

Amazon.com is forming an expanding triangle, which can either be a top or continuation pattern, but that's for long term direction of this stock, in the short term, AMZN is right at the upper trend line, the likely path is down to 95-100 level at around mid-December or early January 2011.