Wow! How about those analysts!!? Didn’t they do a great job on Amazon (AMZN)? (July 24, 2015)
I want to look at Amazon ( NASDAQ:AMZN ). Now, here’s the deal with this, I’m laughing, laughing with derision and aggressiveness and here’s why: because the analysts, you know these smart guys that are on Wall Street? They actually predicted a 19-cent share loss for Amazon ( NASDAQ:AMZN ).
Now, Amazon ( NASDAQ:AMZN ) knows how to do several things really, really well, web services, retail, shipping, and losing money. They’ve got like a gazillion dollars in revenue; maybe not a gazillion but at least a half of gazillion dollars in revenue every quarter and they’ve always managed to lose money. So betting that they’re going to lose money isn’t a bad bet.
However, these people are analysts, they’re supposed to know what they’re doing. They predicted a 19-cent loss and the company actually gained 25-cents. Now, if you’ve got somebody else managing your money that manager probably listens to these buffoons. They missed it, when you think about it, by almost 200 percent. It’s not like they predicted a 19-cent loss and they broke even, they predicted a 19 cent loss and Amazon ( NASDAQ:AMZN ) made 25-cents; this is why this stock went so far out.
Now we’ve seen this before on other stocks and it’s always a good short setup, seriously, always a good short setup. I’ve not seen one, and yes you can take that to the bank, I’ve never seen a stock that has already made a move, gap up and just keep going. Now we’ve seen Netflix ( NASDAQ:NFLX ), we’ve seen Google ( NASDAQ:GOOGL), this and that and the other thing, but those were different because they didn’t gap up as much as this.
These guys, I’m doggin’ on analysts because they’re totally “doggable”. These guys are like economists only with tickers. When I watch CNBC or wherever and I see somebody coming on, Chief Economist for so and so, I figure he better be the head of an Indian tribe or I don’t want to watch him, and so I typically go to the “View” and see if I can find some robust conservation there.
Now, here’s the deal with Amazon ( NASDAQ:AMZN ), that was a big, huge beat. I have no idea whether this is a one-time deal or not. I don’t want to be one of those guys that I have no respect for. I will just say this, you’ve got to follow this pattern; this has strong downside momentum. What I said about making 25-cents verses estimates for losing, throw that out the window now, because all it will do is have you start looking at this going, “Well gosh, that was a big beat, the stock’s still up, maybe a little under 10 percent. So with those kind of numbers how low can it go before people start imposing a new valuation on this?”
I want you to keep something in mind. First of all, nobody ever made money on fundamentals, except the analysts putting them out, and they get salaries so they don’t count. Nobody made money on fundamentals; they make money on price action. Don’t try to apply fundamentals to such a huge move like this. Certainly at some point next week this stock will close higher than it opens that day.
Right now momentum is really, really strong to the downside. Don’t let this 9.8 percent increase, and you’ll see this on financial news, “Wow! Amazon, great day, the company went up almost 10 percent.” No, that’s not your trade. The deal is, it went down almost 10 percent after the open. So if you’re long this stock I would still be selling it. People in “Stock Market Mentor” and “Option Market Mentor” were trading this to the downside.
The bottom line is this, you can make money on Amazon ( NASDAQ:AMZN ). I’m short a bunch of calls, I have some really good trades going on this, you can do this too; I think there’s more downside in this. Ultimately, this stock can move higher, but look at this, it’s a beautiful pattern. I want you to do this before you decide to buy Amazon ( NASDAQ:AMZN ) next week; this is one of my favorite things to do. Look at where the price is right now; draw a box. Do you think that Amazon ( NASDAQ:AMZN ) will never come into this box?
Do you think it’s just going to keep going up, and up, and up, and up? Is that what you think? Or do you think maybe the stock’s going to come in and find somewhere in this box to truly find support? Now, should the stock go clear down to 500.00, should it fill the gap? I don’t think so, I don’t think it should; but number one, I don’t know and anybody that tells you they do is somebody you don’t want to listen to. I’ve been doing this a long time and I can tell you, if I don’t know, nobody else does either, they’re just going to guess.
The other thing is this, and I want you to think about this hard, if Amazon ( NASDAQ:AMZN ) is finally making money then these same analysts who totally screwed the pooch on their last estimates, at least they’ve got some positive numbers that they can start extrapolating forward. Here’s the thing, when they start doing that then they’re going to have to assign a multiple to this company and that multiple could be so high, because again, when the company’s not making money your multiple is infinity, everybody just looks at the revenues.
But suddenly when you start looking at earnings per share, if this multiple is too lofty analysts are not going to be recommending to their brokers, who recommend to you and the big firms, to buy the stock. They’re going to let the stock settle in. Now, does that sound like dependable methodology one way or another? Answer, no. What’s dependable is the chart; this is outside the upper Bollinger Band, it needs to come in. This stock, in my view, is trapped in jail. Here’s the upside, where’s the downside? At the very best it’s there. At the very worst, I would say down there.
So steer clear of Amazon ( NASDAQ:AMZN ). The bottom line is this, at this point this was not a bullish move on Amazon ( NASDAQ:AMZN ), it’s a bearish move. The reason again is, there was so much buying pressure right at the open the shorts were having a stroke. There were a lot of folks that were short Amazon ( NASDAQ:AMZN ). Why? Because these buffoons in the pinstriped suits were predicting a 19-cent share loss, that didn’t work out too well, so everybody’s freaking out, there’s the volume right at the open. I hope this video helps, and if you’re an analyst and you’re listening to this, yes it’s true, I don’t respect you.
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