Do you like Amazon (AMZN)? Do you hate Amazon (AMZN)? You can have it both ways…as long as you’ve got the right timeframe. (April 27, 2018)
AMZN
You can see what happened here with Amazon ( NASDAQ: AMZN ). Let’s take a look at this and see how we could trade this, actually, how we did trade this.
The company reports awesome earnings. I don’t know the exact numbers and nobody really cares, least of all me. They were supposed to make around $1.00, something like that. Instead, they made something like $3.00 so they beat the snot out of the estimates; the stock just gapped up a lot. One thing I will say, I have been talking about this for a long time with respect to Amazon ( NASDAQ: AMZN ), the biggest knock on these guys WAS, not is but was, they don’t make any money.
They take in a gob of revenue, massive amounts of revenue but no money. They don’t EARN anything; they are burning through money; not as fast as Elon Musk has been, and certainly not as fast as Elon Musk will continue to do. BUT, they’re burning money. The deal is, at some point, all Jeff Bezos has the do is just flip a couple of switches, turn a couple knobs and then the money starts pouring in; so he is doing that now.
My bet is that this stock is going to go A LOT higher over the next year or so. I am not like Mr. Bull, Oh my gosh! Dan is bullish on Amazon ( NASDAQ: AMZN ). I have been bullish on this stock for a long time and put my money where my mouth is but I am looking for $2000.00. I am looking for $2000.00 by the end of this year but not from here. This has to do A LOT of backing and filling. I hope it does anyway because I can’t add to my position up here.
How are you going to do that? I want to add to my position; let’s say Apple ( NASDAQ: AAPL ) comes out with a bad number on Tuesday, maybe Wednesday, everybody is selling. So maybe Amazon ( NASDAQ: AMZN ) comes down closer to 1500.00, something like that. That is when I would want to be buying this stock for a longer-term position. You could say, “Well, if I am going to buy it for a longer-term position it doesn’t really matter when I buy it.” Well, that’s true but why buy it here at 1650.00 when you can wait and buy it at 1500.00?
Time frame is really, really super important. So when we are looking at this stock today I am not thinking about that 2000.00, okay? I am thinking about, what is it going to be doing at 9:45? So we look at the intraday chart, the 5-minute chart and you can see what happened here. The stock gaps up. Boom! First thing in the morning, way above the R3 pivot point. So we have a pivot point and then 3 levels of resistance. So the stock gapped up WAY above that level.
You can look at this on Bollinger Bands. The same thing here, Amazon ( NASDAQ: AMZN ), WAY above that level. And so you are pretty sure there is going to be some backing and filling so you are not buying at the open. You didn’t buy at the open, did you? Tell me you didn’t buy at the open. The stock is up here and we are waiting and we are waiting. The longer the period of time goes the more this stock is pulling over. So now it is down at 1610.10 here, we are 15-minutes into the market.
Where are we on the pivot points? Right here, 1590.00 is where the pivot point is, right? So the stock falls back to it; prior resistance, new support. Looks good to me, 1590.00, 1600.00 that is probably where the stock will settle in at; maybe not, hold that short and continue to hold that short. Forget about the fact that this is Amazon ( NASDAQ: AMZN ), you’re looking at the chart. Amazon ( NASDAQ: AMZN ) can go down as well as up, particularly after it has gone up so much.
So now we are looking here, it is 10:45 we see the volume tapered off a lot from where it was at the beginning and now it is just kind of drifting around. Now, this thing is range-bound between 1570.00 and 1590.00. As a day trade you’re done, you’re done. You have shorted the stock, even if you want to wait for the full 5-minute bar, which you certainly can do. Now you are looking here at 1616.00; the stock falls below this, you are shorting the stock there and you have got your buy stop just above the intraday high, the morning high. The high was 1638.00 so you’re waiting 5-minutes. You short the stock right here; your stop is at 1640.00. So you are risking 1.5 percent and you are shorting a stock that is up a lot and is drifting lower. So you like this stock long-term but short-term you hope this thing dies like a measly dog. And then, sure enough, the stock just kind of continues to drift lower.
The point of this video is, you can be bullish on a stock like I am on Amazon ( NASDAQ: AMZN ) but know your time frame. Right now I am thinking Amazon ( NASDAQ: AMZN ) can even go further. I really, really, seriously doubt that Amazon ( NASDAQ: AMZN ), anytime soon, is going to break out to a new high. Why? Because I don’t know what the catalyst is. They reported awesome numbers; everybody knows what they are; huge, massive volume at the open today. Where is the new demand going to come from, that is so, so aggressive and so big that it will not be able to be filled by the supply just from these traders here?
So look for Amazon ( NASDAQ: AMZN ) ultimately to move higher. But over the next few weeks or so I have got to think Amazon ( NASDAQ: AMZN ) moves lower. So just know what your time frame is in a trade before you take the trade. And then make sure your actions are consistent with the thesis that you have. Because if they are not then you are going to wind up, on a stock like Amazon ( NASDAQ: AMZN ), you are going to get thrown all over the place.
You think Amazon ( NASDAQ: AMZN ) is going higher so you buy it. The stock starts moving against you and then you are thinking, wait a minute, I am going to hang onto it. I am going to buy more, I am going to buy more, you are buying it all the way down because you think Amazon ( NASDAQ: AMZN ) is going to go higher, and you haven’t thought, well, wait a minute, what is my time frame? Crap! I am looking at October. I am looking at November. I am looking at the holiday season. What am I doing buying Amazon ( NASDAQ: AMZN ) here above 1600.00? I think I will wait and buy it at 1500.00; time to short this stock.
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