Are you seeing this trade in Amazon (AMZN)? (January 07, 2016)
I want to look at Amazon ( NASDAQ:AMZN ). For the last several videos I’ve been talking about Apple ( NASDAQ:AAPL ), not wanting to buy it. Skyworks ( NASDAQ:SWKS ), not wanting to buy it. These are stocks you want to stay away from. Here’s one that’s a little bit more interesting, Amazon ( NASDAQ:AMZN ). “Dan, are you saying to buy it?” No, I’m absolutely not. This stock goes lower. It’s coming out of a squeeze, the market’s selling off and this stock is very, very extended. We can look for some kind of a relief rally in the broader market sometime soon. I don’t know when, maybe tomorrow, certainly next week at some point. From what level? That’s what we don’t know.
This is the point that I want to make: this company reports earnings in 20 days, on January 27th, in 20 days. Imagine how cool it will be if this downtrend continues between now and then and this stock gets down to about 550.00, which, by the way, is prior resistance, right here. It’s really expensive, the P/E is 917.00, by the way I’m getting that from MarketSmith, it’s a trailing P/E average over the last several years. The point is, it’s 917.00, nobody, other than a moron would say Amazon ( NASDAQ:AMZN ) is cheap. It’s not, it’s really, really expensive, it always has been.
But if the stock were to continue to fall, by the way, not with you, and not with me, it falls without us. Or perhaps you’re short if that’s you’re deal. But if this stock were continue to fall the “rubber band” gets so stretched to the downside that when the company reports earnings the stock almost can’t go down any further. It almost has to bounce, it almost has to go higher, because it’s already sold off so much. And you know they’re going to report good numbers because that’s what Amazon ( NASDAQ:AMZN ) does, it’s what it’s been doing for a while. They sure did okay a year ago. They did okay the following quarter and the quarter after that. So we have no reason to believe that that’s not going to be the case here.
But what we’re looking for is, right here, right now, we’re looking for this stock to fall a little bit more, give you a better entry or at least an opportunity to consider a better entry prior to earnings in 20 days. What I’m telling you is this, don’t be sitting here holding the stock and as the stock drifts lower thinking, “Well, they report earnings on January 27th so maybe then the stock will recover, it will bounce up and I’ll make some money on the stock.” Don’t do that. You don’t want to be holding stocks on the way down, that’s called losing. You want to be holding stocks that are moving higher, that’s called making money. So why don’t we do more of the latter and less of the former?
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