Amazon stock’s rally fits like a pit in the Elliott wave peach, as Dr. Seuss might put it!
On July 5, Amazon.com, Inc. celebrated its 30th birthday. It’s hard to believe the $2 trillion e-commerce behemoth began as an online bookstore out of CEO Jeff Bezos’ basement.
But, through the megawealth and fame, Bezos has stayed true to his first love of literature which inspired Amazon’s bookstore origins. According to Yahoo Finance, Bezos’ office wall at his Amazon headquarters is adorned with this quotation from children’s book legend Dr. Seuss: “If you want to catch beasts you don’t see every day, you have to place quite out of the way.”
We believe the same philosophy applies to catching beasts of opportunity in any pursuit, be it personal, professional or financial. Especially if you participate in trading or investing. The place that is “quite IN the way,” so to speak – the mainstream analysis of “market fundamentals” — is often a wild, wild west of news-whipsawing-markets… and often, in ways that make little sense. (You could say they leave you feeling ga-fluppted!)
Case in point: Amazon’s stock (AMZN), which continues to catch the tail end of wild winds amidst Bezos’ selling spree of his own company’s stock. Since February, Bezos has announced one massive unloading after another seemingly every time AMZN hits a new record peak. According to Seeking Alpha, July 9:
Bezos sold $863.5 million in shares on July 9. The sale comes just days after Bezos disclosed he had sold $5B worth of Amazon, as part of a February disclosure by the company noting that Bezos had adopted a plan that would let him sell as many as 50M shares before early 2025.
Granted, that’s petty cash by Bezos’ standards, but the bearish undertones of a company’s CEO dumping its own stock, billion after billion, certainly seem to take the opposite side from the mainstream media’s current opinion on Amazon, which is “buy or die.” From the usual news sources:
- Amazon: Soaring Profits are Just the Beginning – June 27 Seeking Alpha
- “Amazon: The Gift that Keeps on Giving” — July 2 Seeking Alpha
- Amazon is named one of “3 Millionaire-Maker Growth Stocks to Buy Now: July Edition – July 10 Investor’s Place
Yes, in this “in” place of “market fundamentals,” sometimes anything goes. Up is down and down is up while the beasts of opportunity get away.
The place “quite out of the way” is Elliott wave analysis, which offers something quite out of the ordinary in the world of market timing; namely, patterned price action. Each one of the five core Elliott wave patterns you see on s price chart adheres to a specific set of rules and guidelines for determining depth, duration and direction of trend. No “fundamentals” required.
Let’s take AMZN for an example. On June 5, our Trader’s Classroom presented this labeled price chart of AMZN. There, we determined that prices were at the end of a fourth wave correction.
That was the key to unlocking the most probable next move, as fourth waves follow several prescriptions, as outlined in the guidebook Elliott Wave Principle – Key to Market Behavior. They are:
- Wave 4 never ends in the price territory of wave 1.
- Wave 4 is usually a flat, triangle, or combination thereof
- The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus.
With these specific parameters, Trader’s Classroom was able to anticipate AMZN’s next move of significance. From the June 5 Trader’s Classroom:
“Let’s just go ahead and look at what important support would be under this count. [A Fibonacci] 38% of the third wave isn’t a whole lot lower at 171.77, and you’ve got the previous wave 4 low at 166.32. So that area should be support and Amazon should move higher as long as it holds.”
And from there, AMZN did hold above cited Elliott wave support, surging to record highs on July 9.
Dr. Seuss also wrote: “The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”
If you’re ready to learn a new, independent model for navigating financial markets – or, you’re just a lover of learning new concepts about the systems that drive our social and economic experiences, then today is a great day to join our Elliott wave community.
Wherever You Go, There Opportunity Is
In the words of Elliott Wave Principle – Key to Market Behavior:
The Wave Principle is the only method of analysis that also provides guidelines for forecasting. Many of these guidelines are specific and can occasionally yield stunningly precise results. If indeed markets are patterned, and if those patterns have a recognizable geometry, then regardless of the variations allowed, certain price and time relationships are likely to recur. In fact, experience shows that they do.
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