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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 229.55

+0.2%

Dec 5 9:30 AM EST

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To: Sarmad Y. Hermiz who wrote (49810)	4/11/1999 4:34:00 PM
From: Ron Kline	Read Replies (1) of 164684

The breakouts occur because of some news or event that causes a change in perception in the company. Due to the news of AMZN getting into the auction business, and seeing how quickly it has been implemented and growing every day, it has caused some holders of AMZN to start to rethink and hang on to their shares. At the same time the analysts start to adjust their numbers upward to reflect this news. You have a potential good earnings report due soon and so accumulation begins. You can tell because AMZN continues to make higher highs since at least 2 weeks ago. As it moves back up people start to notice the chart starts looking more constructive and see that a cup formation is being made. But many potential buyers still wait because they are not sure if AMZN is going to make it past those old highs, and don't want the risk of a potential double top (doesn't breakout). so the movement stays somewhat choppy. Then as the stock starts to get closer to that old high and volume starts to really increase you get a flood of funds and individuals (mostly it's the funds causing the volume) buying causing a jump in the stock, or the technical term of breakout. The buying and movement up is so strong because the once sidelined money sees confirmation and want in before it jumps too much (Look at Yahoo and you see it jumped to 244). At that point most of the sellers who bought too high months back decide to hold on because they see the stock is strong and they are no longer losing a lot of money. This combination of reduced selling and high buying allows the stock to move more freely and in less of an erratic pattern. But until the breakout occurs AMZN will continue to be choppy. Do I know for sure a breakout will happen? No because if it was always that easy we would all be millionaires and most of us are not. Just when I told people on the Dell thread of a breakout last quarter it was the one that failed (at least temporarily) so do your own research please. Ron

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