However, as I stared at the charts, I wondered to myself, Where is this one headed?
Temporarily, it would appear as though the strongest hand still appears to be held by the bears. Below is a one-year chart of Amazon highlighting the recently weak price action.
As you can see in the graphic, an optimist could argue that the $340 price level looks to be support for the stock. But one could also argue that the stock has failed to breakout from the lower trading range. It also failed to break through the $360 level and closed below its 21-day moving average.
Although I'm bullish on Amazon over the long-term, I have to say that I don't see a very favorable setup at the moment. As a common saying in technical analysis goes, the more times the price bounces off support or resistance, the more likely it is to break through that particular level. Right now, $340 is still vulnerable to the downside.
Considering that the current sentiment around the stock is still rather negative following the company's less-than-stellar fourth quarter earnings results, it appears more realistic that the stock will flush down to the $315 to $325 level before finding stronger support.
But don't think of that as a bad thing if you're a bull. All it does is give you an opportunity to buy the stock. Quite frankly, I hope it gets there. Let's take a look at a longer term, three-year chart of Amazon.