Amazon (AMZN) is still ok…but only barely. (September 09, 2016)
AMZN
On this video I want to talk about Amazon ( NASDAQ:AMZN ). Here’s the deal: I want you watch this really closely. Everything pretty much sold off, except inverse ETFs today. Here’s the thing, this is still okay. Heavy, heavy volume, 3 percent decline, but it’s still okay. And why is it okay? It’s okay because so far it’s holding up ABOVE the 50-day moving average. Now, if that changes then I don’t want you to be hanging onto this stock. I have a bunch of options on Amazon ( NASDAQ:AMZN ). If it starts falling below this 50-day moving average I will probably wait and see whether it CLOSES there, but if it does I’m out of there.
Here’s what you want to remember: Look what happened last here, this fell below the 50-day moving average; it didn’t frankly look a lot different than it does now. Consolidating, waiting for this nice upside move. Oh crap! And then during the day it trades below this level and it’s down below 700.00; you have to sell man. The volume was still, on that day, much heavier than average, so you are selling because the stock is down below the 50-day moving average. Boom! Well, not so fast. What happens is, this is when a lot of big traders, you know large hedge funds, money managers. If they see the stock trading at the 50-day moving average that’s a buying opportunity for them and they will take it.
Now, listen to me because I’m giving you pearls, that is not to say that because a stock hits a 50-day moving average it’s GOING to bounce. RATHER, when a stock hits a 50-day moving average and BOUNCES, you know what’s happening. So you don’t look at a stock hitting a 50-day moving average and say, “Oh! The big boys are going to buy.” No, you look at a stock that is hitting a 50-day moving average and BOUNCING and you say, “Oh, the big boys ARE buying.” Well, when the big boys are back in town, I want to party with them. So look what happens with Amazon ( NASDAQ:AMZN ), nice ride, okay? So now, we are back to the 50-day moving average. If this falls BELOW the 50-day moving average on Monday, I’m going to be kind of nervous. Now, if it just continues to crater, I’m going to be nervous hitting the sell button.
But what is really going to matter is NOT so much what happens in between here, but where the stock closes on Monday. If it closes back ABOVE this 50-day moving average then you must look at this as a successful test. Pullback down to, and then a rebound back above, this is a buying opportunity. Also if on Monday, Amazon ( NASDAQ:AMZN ) doesn’t fall but just continues to go, that’s a successful test as well. So these are two BULLISH signs. What is NOT good is if the stock opens up here and then does something like that. Can you envision something like that happening? I can, unless you area an ‘Amazonian’, a big fan of Amazon ( NASDAQ:AMZN ), this stock could just keep going, it could just keep falling.
So as long as it stays in this uptrend, just figure this just got dumped with everything else. Nobody really gives a rip at Amazon ( NASDAQ:AMZN ), whether ‘Jumpin’ Janet and the Jellybeans’ bump the rates up by a quarter basis point or not. Okay? It really doesn’t even matter. What matters though, is whether there are firms that are dumping this stock enough to where they are going to drive it BELOW the 50-day moving average. Will that make the stock cheap? No. Amazon ( NASDAQ:AMZN ) is never cheap. It has never been cheap. It wasn’t even cheap when it was privately held about 30 years ago, or whenever the heck this thing started trading. So hang on to this as long as it is above the 50-day moving average.
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