This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

POW! Amazon to Put Comics on Kindle Fire as Momentum Bubble Bursts

NEW YORK (TheStreet) -- I haven't read a comic book since I was a kid, but I think offering comics though comiXology on the Kindle Fire is a great idea. I bought my wife a Kindle Fire for Christmas, her first adventure into the computing world, and she loves it.

Innovation has never been an issue for (AMZN - Get Report) but with a 12-month forward price to earnings ratio of 140.31, the stock is not a value investment. Unfortunately, it's also no longer a momentum stock. Its momentum bubble has popped.

On March 28 in, Pop! Goes the Momentum Bubble I warned the momentum bubble was starting to pop. Amazon was one of eight stocks profiled.

The daily chart for Amazon shows the stock set its all-time intraday high at $408.06 on Jan. 22, which was a failed test of our first-quarter risky level at $402.56. This gave investors the opportunity to book profits.

Must Read: Bet JPMorgan, Not Wells, as Harbinger for the Market: StockTwits

Notice that over the last two years buying the stock at its 200-day simple moving average (in green) provided buying opportunities two times; in November 2012 and May 2013. The stock is now below its 200-day SMA at $341.19 breaking below this 'reversion to the mean' on April 3. The stock is below its 21-day and 50-day SMAs at $344.90 and $353.11 with the 12x3x3 daily slow stochastic trying to rise out of oversold territory.

Courtesy of MetaStock Xenith

The weekly chart for Amazon is negative with the stock way below its five-week modified moving average at $345.89. Note that the stock crossed its 200-week SMA at three points over the last 12 years; May 2003, between January 2006 and April 2007, and between October 2008 and February 2009 when the bubble began to inflate. The 200-week is currently at $235.22, which is a big drop to this longer-term "reversion to the mean."

Courtesy of MetaStock Xenith

Investors should consider entering a GTC (good until cancelled) limit order to buy weakness to an annual value level at $259.67. The stock traded around its annual pivot at $334.95 between March 27 and March 31 before the break below its 200-day SMA at $341. Former semiannual value levels at $351.24 and $359.11 became pivots between Jan. 31 and March 26 and are now risky levels.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at .

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $532.54 0.00%
AAPL $110.38 0.00%
FB $92.07 0.00%
GOOG $626.91 0.00%
TSLA $247.57 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs