Despite a challenging year for stocks, particularly for the Magnificent 7, Amazon has shown signs of a potential turnaround. The author, Nishant Pant, highlights three technical indicators to support this view. The Accelerated MACD is showing a bullish crossover, although caution is advised due to the tightly coiled nature of the lines, which can lead to false signals.
The Relative Strength Index (RSI) has approached oversold levels but is now rising, indicating renewed institutional interest in Amazon. Additionally, the Directional Movement Index (DMI) is on the verge of a crossover, suggesting a possible trend reversal.
To capitalize on this anticipated bounce, Pant recommends a bull call spread strategy targeting the $240 to $245 range, with a limit price of approximately $2.50 per contract. This setup allows for a risk of $1,000 with the potential to double that amount if AMZN surpasses $245 by the expiration date.
Overall, the analysis presents a structured approach for investors looking to engage with Amazon's stock at a time when it may be poised for recovery