Simplistic Technical Analysis for AMZN (November 9th 2014)

Last week I had predicted that AMZN would encouter resistance at $305 or even at $310 and then head down. Turns out that the stock hit resistance at $305 and reversed.

Through the week, the stock trended down after encountering resistance at $305 and ended the week marginally below $300.

The overall trend continues downwards with lower highs and lower lows (highlight 1). Looking across at similar MACD separations (highlight item 2, 3 and 4) we can see that the stock moved upwards in each case. At highlight 2, the stock moved considerably higher since the overall trend was positive. At highlight 3, the stock moved marginally higher but predominantly sideways.

Looking at highlight 4, and overall trends, here are my amateur predictions for the coming week...

1. The stock will move marginally higher and max out at $302.50 or $308.50

2. The stock will reverse again and fall to between $290 and $295 over the period of next 2 to 3 weeks.

Lets see how this pans out..

Simplistic Technical Analysis for NFLX (November 8th 2014)

Last week, I had predicted that Netflix was going to go higher. More specifically I had predicted the following...

1. Netflix will rise to $400 by end of next week and continue to 410-415 for the week after.

2. Netflix may test $425 for the week after, but will revert to 410 or so within a 4 week period.

In hindsight these predictions did not turn out to be true for primarily two reasons.

1. As per my fundamental analysis, the stock was already trading near its intrinsic value of $390.

2. From a technical analysis, the bollinger band had contracted perhaps and the stock was touching the top.

This week again, we are again looking at the 6 month candlestick chart for Netflix on Yahoo stocks. The following indicators have been added to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation

2. 20, 50 and 200 day Simple Moving Averages

3. MACD indicator for 26, 12 and 9

4. 14 day Money Flow Index 

If we look at the charts this week, we can see that the stock has trended down after touching the top of the bollinger and has also reflected from the bottom by the end of the week (highlight 1). From a MFI perspective, the stock is not overbought as yet at 62 odd. MACD divergence (highlight 3) has marginally moved to positive territory, while MACD and signal are very much in oversold territory. Crossing the 20 day and 50 day SMA is a trigger for the stock to move higher and is liked by the bulls. So expect some upward tick if the stock crosses these thresholds.

Here are my short term amateur predictions for the week.

1. The stock will end the week at the upper Bollinger at 394. 

2. It will reverse to below 390 the week after and then get pushed to around 405-410 around three weeks from now.

These are amateur predictions so please do your own research. 

Simplistic technical analysis for Russell 2000 (November 8th 2014)

Last week I had predicted that against all expectations, the Russell may push higher before reversing itself by end of the week.

The way things actually proceeded was that the Russell moved sideways and ended the week pretty much at the same place as last week.

Again, we are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks, with the following indicators on the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9
4. 14 day Money Flow Index

Looking at the above, we can see that the Bollinger band has broadened, giving the stock room to grow (highlight 1). The MFI has moved sideways from last week indicating that a downward movement is likely but not guaranteed (highlight 2). However, the MACD divergence has sloped down indicating that downward pressure has reduced. Given indicators 1 and 3, it seems these are bullish indicators hinting that the index still has room to move higher.

I would also like to include the following chart... XLE (Energy index), XLP (Consumer Staples) and XLY (Consumer Discretionary). We can see that XLY is quite correlated to the Russell. The Discretionary spending outlook is weak indicating that Russell will continue its long term down ward trend eventually.

Based on the above, my amateur predictions are as follows:

1. The index will move higher by 10 or 15 points in the coming week (1185-1190) , before starting to fall.

2. By end of second week, the index would again fall marginally below 1180.

Please do your own research before making any financial decisions.

Simplistic Technical Analysis for FB (November 2nd 2014)

Like most stocks that announced earnings this quarter, FB too fell from where analysts expected it to be.

Unlike other stocks, its short term technical indicators, indicate an imminent reversal that could start as soon as early next week. If that happens the stock could fall to almost 70 by end of next week.

Lets see how it turns out.

Simplistic Technical Analysis for AMZN (November 2nd 2014)

Like many other technology companies, Amazon's earnings disappointed a lot of analysts who were expecting a rosier outcome.

The stock that fell after hours the earnings report, has been trying to recover much of last week.

In the last week, the stock has trended up and is showing signs of a continued momentum in the coming week. Both MACD indicator as well as MFI are indicating low to severe under bought territory indicating that stock will trend higher.

My estimate is that stock will encounter resistance at 305.50 (closing price on Friday) or even at 310-315 before trending down.

Simplistic technical analysis for NFLX (November 2nd 2014)

Last week saw NFLX climb back above $390 to at around $392.77 by the end of the week. In my previous post last week, I had mentioned that trends seem to indicate that Netflix was going to cross 390 at head towards 400 in 2 to 3 weeks.

That turned out to be true. Let us examine this week, what the trends seem to indicate.

To conduct my analysis, I am using the following indicators. We are looking at 6 month candlestick chart for Netflix on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

I have also added a fourth indicator

4. 14 day Money Flow Index 

Based on last week, it is clear that $380 was a support level that needed to be tested. Once the stock tested that level on Thursday, it moved up. The growth trajectory seems similar to the rise in beginning of August that was a 3 week trend. Assuming a similar trend started October 16th when the stock bounced back from a poor earnings call, we can see that we are mid way of that trend. This implies by second week of November, we may be testing $415 or so.

Even looking at oversold, overbought indicators, MACD and MFI, we can see that stock still has room to grow from here. This may be tested at $400 and $410 levels for some profit taking since the valuation outlook has not changed substantially. My valuation of intrinsic value remains at $390 for Netflix.


Here are my short term amateur predictions

1. Netflix will rise to $400 by end of next week and continue to 410-415 for the week after.

2. Netflix may test $425 for the week after, but will revert to 410 or so within a 4 week period.

These are the predictions of an amateur so please make your own decisions based on individual analysis or professional advice.

Simplistic technical analysis for Russell 2000 (November 2nd 2014)

In my last week's post I had speculated that Russell 2000 would touch 1160 and then a reversal would take place. However, this week, against all expectations Russell continued to move higher beyond 1160 and closed beyond 1173.

Lets see if we can assess the next moves for the index for the coming week.

I am using the following indicators

We are looking at 6 month candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation
2. 20, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

I have also added a fourth indicator

4. 14 day Money Flow Index

Last week, the Russell had ended the week at 1118.82 and 1160 seemed far away. In one week the index climbed more than $55 to end at $1173.51. There was also a Breakaway gap on October 30th where the stock went from a previous day close of $1155 to next day open of $1169 (see item 6 on chart above), indicating some market news that raised market expectations. Whether it was the Feds announcement or Japanese announcing their own quantitative easing, or a combination is difficult to tell.

Looking at the MACD indicator, it has already touched 10.35 (item 1 in chart above). I was expecting a reversal above 7.35 indicated in my last week's post. The market is in overbought territory but is not done. So where do we go from here?

If we look at Money Flow Indicator (MFI), which is a lead indicator that combines 14 day price and volume movements, lets look back to beginning of October (item 2). It was a downward trend, but the MFI indicated an upward trend. It implied that a reversal would happen at some point. The stock fell further and then reversed.

However, if we look at current MFI (item 3), it is at 77 odd. While it supports that the stock is overbought, a value above 90 would have indicated unsustainable overbought levels. The present value does not indicate so. To me, this means that the upward trend will continue till we see a reversal or flattening out on the MFI. If we look at previous 6 month highs (item 5) we can see that MFI flattened first while price continued to rise a little bit before the trend reversed (item 7). MFI was at 72 odd when it reversed in that particular instance.

Again, coming to my amateurish predictions, I suspect the following:

1. The start of week the uptrend will continue to push index higher.

2. Russell 2K will continue to test previous highs at 1183 (item 4) and even 1208 (item 5).

3. Perhaps by end of next week we will see the beginning of the reversal.

Once again, I am learning technical analysis, so please do your own research before making any decisions.