Huge gap open today for Amazon (AMZN). So why is this not a good thing? (June 19, 2017)
AMZN WFM AMZN
I want to take a look at Amazon ( NASDAQ:AMZN ) today. This was a heck of a move, I have spreads on this stock. I always keep a box around the spreads that I have so that I know, as long as the stock is still inside the box, I am still making money. If it starts to move outside of the box then I have got an issue. This morning I almost had an issue here. For the last couple days Amazon ( NASDAQ:AMZN ) has been really strong; I look at this as a real problem for bulls if you are buying right now at 995.00. I lightened up today; I actually sold the stock that I owned and now I just have calls and puts, trading it in this box.
Here is the thing: The company has offered $42.00 a share for Whole Foods ( NASDAQ:WFM ); Whole Foods ( NASDAQ:WFM ) is trading above 43.00. The only reason it is trading above 43.00 is, if it is a secret deal, which it is not, we all know it is 42.00. Or, the market is figuring that there is going to be a competing offer, of course at a higher price. I don’t play this game, it is totally speculation, they could get a higher price at 44.00 or $45.00 and have Lex Luthor over there at Amazon ( NASDAQ:AMZN ) say, “You know what? Screw this. I will do something else.” Boom! The stock is down at $37.00 because the offer up here was not real. So the bottom line is Whole Foods ( NASDAQ:WFM ) is not my deal.
Amazon ( NASDAQ:AMZN ), I think the stock ultimately moves higher. You can not look at this and say, “Oh okay, well this is the top.” HOWEVER, after the kind of action this stock had on Friday after this announcement, now it is up another $7.50 today, I don’t think it looks very good. The reason I am saying that is, because these are dark boxes. The stock opened here, it was sold into. The stock opened here, it was sold into. So this is a stock that is actually being liquidated. Retail buys in the morning, professionals are selling the rest of the day. This stock actually closed lower than Friday’s open on the news that Amazon ( NASDAQ:AMZN ) was buying Whole Foods ( NASDAQ:WFM ). I just think this means something.
So what I would suggest you do is, take some profits on Amazon ( NASDAQ:AMZN ). I wouldn’t buy here. If the stock happens to fall back closer to the 50-day moving average or if the stock trades sideways long enough to where the 50-day moving average ultimately catches up to it, then maybe I would take another stab at the stock. But until that time comes I think you have just got to trade this on the in-betweens. Between 1020.00 and say 950.00 now, something like that, on the option side, and it will work just fine. Don’t take your eyes of Amazon ( NASDAQ:AMZN ), but if you long this stock and you have got a lot of profits go ahead and take it because I think the stock is in jail right now.
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