Amazon.com Preps for Push Higher
04/25/2011 11:53 am EST
Traders may want to focus attention on shares of Amazon.com (AMZN) this week, as a number of technical stars look aligned for a bullish move higher.
Amazon.com (AMZN) had a big move higher last Wednesday and Thursday off of a double hammer at support near the 50- and 100-day simple moving averages (SMAs).
With a Moving Average Convergence Divergence (MACD) indicator that is just crossing positive and a Relative Strength Index (RSI) sloping higher, it looks poised to continue this week.
Also note that there is an inverse head-and-shoulders pattern forming that will confirm if it gets through the neckline at about $187.50. The target on a break would be $222.61.
First resistance is at $191.60. Over $191.60, you could consider taking some money out of the trade and rolling it into July 195 calls, which went out at just under $7 on Thursday with the plan to eventually spread them against July 225 call spreads as the price nears $200.
By Greg Harmon of DragonflyCap.com