Amazon Created A Bull Trap After Bezos Unloaded Shares: What's Next?
Amazon.com Inc (NASDAQ:AMZN) created a bull trap on its first-quarter 2021 earnings report and double-topped at its all-time high of about $3,552.
On Wednesday, filings with the U.S. Security and Exchange Commission revealed Amazon CEO Jeff Bezos had taken advantage of his company’s all-time high run and sold $2.5 billion worth of shares.
Investors often dislike hearing company insiders are unloading their positions and although Bezos plans to use his proceeds to fund, his space flight services company Blue Origin, the sale accounts for a fair share of the reason Amazon lost over 7% of its value this week.
On Thursday, bulls bought the dip, and Amazon’s stock was able to muster a $36 move north. A loss of follow-through momentum had Amazon trading flat on Friday.
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The Amazon Chart: On Thursday, Amazon’s stock hit and bounced from support at the $3,247 level. On Friday, the stock attempted to jump over an upper resistance level at $3,326 but rejected and retraced back to Thursday’s closing price of around $3,306.
Tuesday’s retracement, attributed to Bezos’ personal stock sale, dropped Amazon back into a bullish descending channel the stock has been trading in since Sept. 2.
Amazon’s stock is trading below the eight-day exponential moving average (EMA) and the 21-day EMA, which is bearish, but the eight-day EMA is trending above the 21-day EMA. If Amazon’s stock was able to regain the $3,326 level it would also regain the two commonly followed EMAs as support and put the stock into a bullish position.
Amazon is trading over the 200-day simple moving average, which indicates overall sentiment in the stock remains bullish.
Bulls want to see Amazon’s stock regain its overhead resistance and break up over the upper sloping trendline of the descending channel to make another run towards all-time highs.
Bears want to see Amazon’s stock continue in its downtrend until it loses the $3,247 support level. If it loses that level, it could trade down towards $3131.
AMZN Price Action: Shares of Amazon were trading around $3,308 at last check.
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