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In spite of the surging, surging, surging stock market, one puzzling outlier is the former momentum stock Amazon. Anything this well-known (and well-loved) that sits out a day like this merits attention. It needs to get above the tinted zone I’ve drawn below to reassert itself; otherwise, I think it’s just going to roll over at the first sign of market weakness (should such a thing ever be permitted in our lifetimes).
Yesterday was a strange day to say the least. To start with SPX overshot the obvious H&S neckline by 11 handles, which weakened the H&S setup even though the bounce I was talking about yesterday morning then delivered in spades. That bounce was then apparently fuelled by the Fed unexpectedly reinstating $6bn of POMO that had previously been cancelled, and the bounce was a very strong squeeze that ran a very impressive 52 handles from low to high.
So what’s the takeaway, apart from the obvious that as well as distorting the economy on the bigger picture, the Fed can also make trading tricky on an intraday basis?
