So you want to daytrade. Let’s look at Amazon (AMZN) (January 31, 2015)
I want to look at Amazon ( NASDAQ:AMZN ). They announced earnings that surprised the “Street” to the upside; it’s still all about Prime. I will tell you this; if a drone starts flying somebody’s package over my house I’m going to snap it with a slingshot. That is too “George Jetsonish” for me, it just doesn’t work for me. Think about it because, “Oh I want to have something delivered to my house by a drone”.
Fine, how about the shopaholic next to you who loves to buy Amazon ( NASDAQ:AMZN ) stuff because they love to have something dropped by their house too. I don’t know if you have ever had one of those drone follow you while you’re hiking, I have and it’s a little nerve-racking. So just be warned if you live near me and you’ve got a drone flying over me, lights out, and then you can sue me for destroying property, I’ll make my case and won’t go to jail.
Enough of the editorializing, Amazon ( NASDAQ:AMZN ), nice gap up, right now just look where support and resistance is, clear down to 340.00, clear up to 360.00, which is right around here. This isn’t quite so relevant because it’s so far back in time but it is a natural place for folks to be selling.
What’s more relevant is this, from the bottom to the top Amazon ( NASDAQ:AMZN ) is up about 25 percent so it’s definitely overbought. Massive volume on Friday as you might expect so just be careful about buying it. I wouldn’t buy it unless you’re looking for a trade on Monday and Tuesday and the stock breaks above 360.00. Generally speaking you don’t want to buy a stock that’s up almost 14 percent in one day, to get into a position, you buy that later.
I want to show you the 5-minute chart because this may look like it would have been a really easy trade to make, like a day trade or something and it really wasn’t. Let’s look here, here’s the intraday chart; this is the first 5-minute bar, if you’re buying here, great, you make a couple bucks on the first thing in the morning but ultimately the stock moves lower.
So what are you going to do, short it here? Great, it seems like a logical thing to do the only problem is that’s like an hour into trading and most of the trading has already taken place. If the stock were going to tank it would have tanked by now, so it’s a drift lower. Now you say, “Oh okay, I’m going to be long, I’ll buy this thing.” So the stock finally breaks out, great, you make a whopping 2 percent if you happen to buy right at the bottom and sell at the top.
The bottom line is there was really no money to be made here in this stock. And by the way, there’s a reason I teach a course, which you can of course get on DVD; we just taught it back in November to rave reviews, it’s called the “59-Minute Trader”. It’s essentially the first hour of trading, after that the fireworks are pretty much over. I teach people how to trade profitably the first hour of trading.
After that, whatever, bottom to top, great, this would have been a nice trade. If I had known, if you had known the stock was going to go 4.5 percent then wouldn’t you have bought right down here, loaded the boat, every thing you had and sold right up here? Okay, 5.5 percent, I’ll take that in a day with everything I own, the problem is you don’t know that, nobody knows that.
To sit here and say that I could have made this much money, woulda, coulda, shoulda, it’ just really not true. You’re managing risk and this was a risky stock to be day trading on Friday simply because there was not a lot of potential reward because of the way this stock had opened and the way it had been trading during he first hour or so. Just keep that in mind, don’t get all lathered up about day trading a stock if it’s not day tradable.
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