Saturday, April 5, 2014
Amazon (AMZN) Tesla (TSLA) and Biotech (IBB)...
Many growth and momentum names have experienced a considerable amount of selling pressure recently. I've decided to take a look at a few. Amazon (AMZN) chart above shows the bull market run off it's 2008 low. It's now matched the size of it's biggest correction at $80 points and now stands at some short term support levels.
Note the percentage move of that previous correction was approximately 32%, as of Friday's close Amazon is 20% off it's highs.
Amazon came into short term support on Friday, matching the size of the previous decline off it's all time high (70 points) and near a previous swing high at $313. As you can see it now trades below it's 200 day moving average, which is always a caution sign, resistance now stands around $350. Which trend will give way?
We've done a pretty good job analyzing Tesla. We defined support in advance here and came up with a $270 price target here. The swing high came in at $265 and it has since traded back down to it's 50 day moving average. Support now stands around $195 which is the previous swing high and $185 which would match (in points) the previous drop from $195.
Biotech has been a monster this entire bull market, the chart above is the Nasdaq Biotech etf by iShares, one of it not the most popular etf tracking the sector. Since 2009 it's had two 25% drops and two 13-14% drops, on it's way up some 400%.
Now this most recent drop has come on increasing volume, which is worth noting. As of Friday's close the sector is down around 18% from it's highs and nearing it's 200 day moving average. The way I see it, support at $212 and $202 will be critical for the near term direction of this trend. These levels of course come in as support as previous swing highs but would also match the size (in percentage points) of the biggest drops biotech has experienced since the 2009 bull market began.
It will be interesting to see how this all plays out. I'm always cautious of any market that breaks the rhythm of it's long term trend.