With holiday shopping season in full swing, now is as good a time as any to check on the charts of online retailers.
When holiday sales numbers start trickling out, knowing what support levels and resistance levels are important could keep the savvy trader one step ahead of the herd when it’s time to load up or dump these two stocks.
Amazon.com Inc AMZN
The online retail leader’s chart shows a clearly-defined pennant formation ever since the stock peaked at around $400 back at the beginning of 2014. Amazon shareholders will be happy to see 2014 go, as the stock is down more than 22 percent on the year amid a broad market rally.
From a technical perspective, shareholders do have a silver lining: the stock appears to have a strong support line established at $284. Amazon stock has twice bounced hard off of that level this year.
Going forward, shareholders should be aware of any break below the $284 level as a potential technical breakdown. Any break above $340 might indicate a breakout from the pennant formation to the upside.
Alibaba Group Holding Ltd BABA
The Alibaba chart is still in its infancy less than three months after the company’s IPO. However, perhaps it is appropriate that the stock’s chart shows a mini-version of the same pennant formation that Amazon’s chart shows.
In the short-term, Alibaba traders will be watching for a move below $100 or above $109 as signs of a breakout from the pennant.
Technical analysis is only one small part of deciding when to buy and sell a stock, but when used correctly it can be a powerful tool.
Disclosure: The author holds a short position in Amazon.
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