Chart of Day…AMZN is Extremely Oversold

U.S. retailers could see a healthy holiday season.

Analysts at Deloitte say retail sales could surge between 4.5% and 5% between November and January, as retailers rake in up to $1.1 trillion in sales. 

The National Retail Federation is forecasting a strong 2019 holiday season. In fact, it believes sales will grow between 3.8% and 4.2% year over year with U.S. retailers racking in between $727.9 and $730.7 billion.  “The U.S. economy is continuing to grow, and consumer spending is still the primary engine behind that growth,” Shay said. The U.S. unemployment rate is low—3.7 percent, according to the Bureau of Labor Statistics.

That being the case, we went searching for some of the most oversold stocks on market – and could see powerful upside momentum.  One of the top names to watch is – of course – Amazon.

No retail stock list is complete without Amazon.com.

At the moment, the stock is oversold after pulling back from $2,000 a share.

Even David Tepper, president of Strategic Wealth Partners says, “We think fair value is somewhere between $2,000 and $2,400 a share, so plenty of upside here,” as quoted by CNBC. “From an e-commerce standpoint, nobody can match them when it comes to price and convenience. Yes, they’re spending some money right now on one-day shipping but that’s a short-term drag and that’s actually going to make them much, much stronger in the long run.”

Technically, if you look at the two-year chart with Bollinger Bands (2,20), MACD, Relative Strength (RSI), and Williams’ %R (W%R), we can clearly see how oversold it’s become.

Historically, when AMZNWealth Strength IndexAAPL is Extremely Up and trending Up touches its lower Band (green line), it’s considered oversold – resulting in a bounce higher shortly.  However, we never want to rely on just one indicator, so we also use RSI.  If RSI is at or below its 30-line, the asset is considered oversold, and confirms what the Bollinger Bands told us.

We can also look at over-extensions on MACD.

For example, if MACD moves too low, which it has done in October 2019, it’s also confirmation.  Williams %R around its 80-line is also an indication of an oversold condition.  After learning of these developments, a trader could consider buying the stock, or a call option.

This is just one of the many tools we employ inside Extreme Option Profits.

PS. Be sure to come back Thursday for our next Chart of the Day