Sell Signals In The Mighty Amazon

Daily and weekly chart sell signals have been triggered in Amazon shares by my computer system over the last two weeks.

Amazon's relentless strength this year so far has contributed greatly to the fact that the overall broader U.S. stock market has not demonstrated any significant weakness except in early February.

Amazon shares surged 23.9% in the 2nd quarter and are now up 45.4% year-to-date! This compares to a +2.9% gain in the S&P 500 Index in the 2nd quarter and a +1.7% gain for the S&P 500 Index year-to-date.

Amazon has a current market valuation of $806 billion and trades at 268 times trailing twelve month (TTM) actual earnings and 84 times estimated forward 12-month earnings.

Amazon is one of the five so-called FAANG technology stocks that have posted exceptional investment returns for investors over the last several years. While all the FAANG stocks are amazing companies, some would argue that they are now over-owned and ready for a potential correction. And if the FAANG stocks "catch a cold" and fall back a bit, perhaps the broader market "catches pneumonia" without this key leadership group!

Bottom line: A significant correction in the U.S. stock market is now underway. Investors can expect at least a 20% decline from recent highs posted over the last three weeks. The Nasdaq Composite Index and the Russell 2000 Index both posted all-time record highs on June 20th, 2018. My feeling is that both these indexes will sustain losses greater than the S&P 500 Index over the next several quarters!

Amazon Daily Chart with Computer-generated Buy & Sell Signals

Amazon Weekly Chart with Computer-generated Buy & Sell Signals

Is Intel Corp (INTC) Telegraphing The Next Big Move In U.S. Stocks?

Most major U.S. stock market averages did well last week, and several actually posted record highs (Nasdaq Composite Index & Russell 2000 Index).

The FAANG Composite Index by my calculation was up 1.17% last week as the Nasdaq Composite Index rose 1.20%. 

So why was Intel down 3.5% on the week after posting a 17-year high on Monday, June 4th at $57.59/share? At its intra-day high last Monday, Intel was up 73% over the last 11 months since posting an intra-day low at $33.22/share in mid-July 2017.

A weekly chart sell signal was triggered by my computer trading system at Friday's close (June 8th) for Intel's stock!

Later this year, when most major stock market averages are down 20% or more, we will look back at last week's all-time high in the Nasdaq Composite Index as a major trap for uninformed bullish investors who were over-committed to U.S equities and dangerously over-weighted in technology stocks!

Intel will then be seen as the "straw that broke the camel's back" and THE warning sign that U.S. stock prices are now vulnerable to a major correction!

FAANG Composite Index Weekly Chart

Intel Corp Weekly Chart

Nasdaq Composite Index Weekly Chart