Amazon Swinging Higher

Amazon (AMZN | Quote | Chart | News | PowerRating) may be of interest to intermediate-term traders who are looking for stocks to add to their watchlists.

Bottom-picking is dangerous, and I certainly don't advocate looking at AMZN as anything more than a work in progress. Here's what you should pay attention to at this point. During the past two weeks, AMZN has broken above and pulled away from its 50-day moving average. This is the first time it has traded above this widely watched moving average for an extended period of time since December 1999. Tuesday's action follows through a short-term uptrend established in early August.

What may be shaping up now is some healthy sideways action which would establish a base from which AMZN could launch from its lows. If this indeed happens, watch for signs of accumulation. That is, up-days on volume surges. When you see a series of such accumulation days occurring through the base-formation process, you know that there's growing hope that an upside breakout might someday occur. Your job is to be patient.

See you tomorrow,

Eddie

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