Will Amazon Predict the Market Top?

by JDH on August 5, 2017

The markets continue to set records this year, and a lot of market strength is due to one stock: Amazon.

On the first trading day of 2017 Amazon traded at under $750.  On July 27 it touched $1,080, for a 44% year to date gain.  That’s impressive.

However, since peaking at $1,080, Amazon corrected all the way to $982 on both August 2 and August 4, and it currently sits at $987.58.

So what does this mean for the markets?

If $982 is a “double bottom”, and a level of support, the market is in great shape.  Amazon will power higher, and pull the markets with it.

However, if $1,080 was a blow off top, and if Amazon has trouble holding above the psychologically important but mathematically irrelevant $1,000 level, the top may be in.

I have no idea which way it will go.  If I had to guess, I would say that a market in motion will stay in motion, and further new highs are likely.  But, I’m cautious, so I will keep a close eye on the world, and if Amazon has trouble over the next few weeks I will adopt an even more conservative stance.  Currently I am more than half in cash.  I’ve locked in my gains for the year, and I like to be able to sleep at night, but that’s just me.

Enjoy the long weekend here in Ontario, even though the weather isn’t co-operating.  More next week.