Invest Daily Pro
  • Economy
  • Investing
No Result
View All Result
  • Economy
  • Investing
No Result
View All Result
Invest Daily Pro
No Result
View All Result
Home Stocks

AMZN: A Case Study in Bearish Divergence

by Invest Daily Pro
February 25, 2025
in Stocks
0
AMZN: A Case Study in Bearish Divergence
0
SHARES
6
VIEWS
Share on FacebookShare on Twitter

In the later stages of a bull market cycle, we will often observe a proliferation of bearish momentum divergences. As prices continue higher, the momentum underneath the advance begins to wane, representing an exhaustion of buyers.

We’ve identified a series of bearish momentum divergences in the early days of 2025, from Magnificent 7 names like Alphabet (GOOGL) to financial institutions including Synchrony Financial (SYF). Today, we’ll focus in on the bearish momentum divergence for Amazon.com (AMZN), which could indicate broader signs of weakness for the consumer discretionary sector as well as for the equity markets as a whole.

The daily chart of AMZN features all the key features of a bearish momentum divergence. Note how the price has remained in a primary uptrend going into this week, marked by a clear pattern of higher highs and higher lows. The most recent all-time high, achieved earlier this month when AMZN pushed briefly above the $240 level, saw the RSI fail to get above the overbought threshold.


The Magnificent 7 have transformed into the Meager 7. So which sectors or stocks might take the lead in 2025? Join me in our upcoming FREE webcast on Wednesday 2/26 at 1:00pm ET as we explore sector rotation trends, analyze growth vs. value dynamics, and spotlight stocks gaining momentum in Q1. Can’t make it live? No worries! Just register and I’ll send you the replay as soon as it’s ready. Sign up for Finding Value: The Great Rotation of 2025 today!


In a healthy bullish trend, we would expect higher price highs to be supported by strong momentum readings, indicating an influx of buying power and investor optimism.  When new highs are matched with lower RSI levels, that suggests a lack of buying power and evaporating investor optimism.

Once a bearish momentum divergence is confirmed, we can monitor the most recent swing low to confirm a potential breakdown as the price follows through after the divergence. After reaching that support level around $215 last Friday, we have seen AMZN push below this support level during the trading day on Monday. A confirmed close below this support level could represent a meaningful breakdown and a “change of character” for one of the top weights in the Consumer Discretionary Select Sector SPDR Fund (XLY).

Any time I see a potential pattern on the daily chart, I remember the classic market maxim, “When in doubt, zoom out!” The weekly chart shows how the most significant pullbacks in 2023-2024 were marked by a sell signal from the weekly PPO indicator.

Over the last two weeks, we’ve recognized a similar bearish pattern to those previous pullbacks, both of which ended with AMZN finding support at the 40-week moving average. That would align closely with the 200-day moving average on the daily chart, which currently sits just below the $200 level.

When I see a bearish momentum divergence appear on a chart like Amazon, I’ve learned to put that chart on a ChartList of potential reversal names, and monitor those tickers for signs of a breakdown of support. Based on our analysis of the daily and weekly charts of AMZN, this leading internet retailer could be signaling a key breakdown going into March.

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!


David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

ShareTweetPin

Related Posts

The NASDAQ 100, On The Brink Of A Breakout, Needs Help From This Group
Stocks

The NASDAQ 100, On The Brink Of A Breakout, Needs Help From This Group

June 22, 2025
RRG Alert Tech Vaults to ‘Leading’—Is XLK Signaling a New Rally?
Stocks

RRG Alert Tech Vaults to ‘Leading’—Is XLK Signaling a New Rally?

June 21, 2025
The Fed Is Getting It Wrong AGAIN As They Hold Rates Steady
Stocks

The Fed Is Getting It Wrong AGAIN As They Hold Rates Steady

June 20, 2025
The Secret To Streamlining Your Charting Workflow
Stocks

The Secret To Streamlining Your Charting Workflow

June 19, 2025
Feeling Unsure About the Stock Market’s Next Move? These Charts Can Help
Stocks

Feeling Unsure About the Stock Market’s Next Move? These Charts Can Help

June 19, 2025
3 S&P 500 Charts That Point to the Next Big Move
Stocks

3 S&P 500 Charts That Point to the Next Big Move

June 18, 2025
Next Post
Could Bitcoin Reach $200000? Market & Expert Insights

Could Bitcoin Reach $200000? Market & Expert Insights

Recommended

SEC eyes registration of crypto service providers

SEC eyes registration of crypto service providers

December 22, 2024
WalterMart malls go solar with First Gen

WalterMart malls go solar with First Gen

November 10, 2024
Entertainment News (11/08/24)

Entertainment News (11/08/24)

November 7, 2024
Randy Larson Financial Planner and Attorney Focuses on Growth

Randy Larson Financial Planner and Attorney Focuses on Growth

August 7, 2024
Stocks In Focus: Three Charts to Watch

Stocks In Focus: Three Charts to Watch

March 29, 2025
“Discovering Flagright’s Strategy for Recruitment and Team Development”

“Discovering Flagright’s Strategy for Recruitment and Team Development”

September 12, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 InvestDailyPro. All Rights Reserved.

    Disclaimer: InvestDailyPro.com, its managers, its employees, and assigns (collectively InvestDailyPro ) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
    The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    No Result
    View All Result
    • About us
    • Contact us
    • Home
    • Privacy Policy
    • Suspicious engagement
    • Terms & Conditions
    • Thank you

    Copyright © 2025 investdailypro.com | All Rights Reserved