Goliath Effect:

Amazon has enjoyed an incredible move recently breaking above a 2186.05 cup base pivot. Today it fell nearly 3%, easily its worst drop since the bottom on the 3/16 session. At nearly one quarter of the XLY, it certainly commands respect when it records a powerful move. It has acted nicely since the breakout, exactly what bulls want to see as we know the best breakouts tend to work right away, but it is starting to show some signs of exhaustion through candlesticks. It registered a bearish harami candle last Friday, and this Monday and Tuesday were followed by a shooting star and bearish engulfing candle respectively. The ratio chart below shows how AMZN is helping the XLY against the S&P 500, but hurting the more diverse XRT against the most widely followed benchmark. Perhaps the little guy may be exacting revenge with the chart below as a bullish inverse head and shoulders pattern needs to breakout for the XRT to enjoy some strength.

This article requires a Chartsmarter membership. Please click here to join.