What’s next for Amazon (AMZN)? If our Fib measurement is correct, it’s time to take some trading profits. (August 31, 2018)
AMZN TLRY AMZN
Amazon ( NASDAQ: AMZN ); here’s the thing, I stretched this Fibonacci time sequence or time zone from this high to this high here; I could have done it here. The thing about Fibonacci is it is kind of similar to Elliott Wave, if you don’t like what you see you could always change it and get something that you like. I don’t rely a lot on this stuff, I know that others do and I think that’s great.
Whatever works for you is the important thing; I use this to keep me in sync sometimes. If I see an ebb and flow here; if I see this kind of thing, especially on a stock like Amazon ( NASDAQ: AMZN ), where I want to trade because I think you can make a lot of money on this stock. For me, this stock goes up 8 percent or so in a week and a half; frankly, that is not a stock that I’m looking at to think I could make a ton of money on it; 8 percent, big deal.
Give me this stock ( NASDAQ: TLRY ), that will put hair on your lungs. But with this, I like to trade call options on this. I don’t do puts, not on Amazon ( NASDAQ: AMZN ), unless I am selling puts. But you can make a boatload of money on call options if you can handle the swings; And if you can handle the right size and not get panicked or exuberant, just trade it mechanically and you can do just fine.
I looked at this, this was several days ago, I said, “The way I’m looking at this, I think it is going to peak on Friday.” I took profits on mine yesterday; I was looking at Amazon ( NASDAQ: AMZN ) today and I was thinking about it. But then this was what kind of got my attention: The stock is up pre-market, it gaps up and then it keeps running. But all this time I am just looking at this as being the top and all of the folks that bought here in this red square are losing money. Some of them are going to be selling and so as Amazon ( NASDAQ: AMZN ) starts moving higher of course the box gets smaller and smaller. Fewer trades, maybe they have already sold or they have just decided, it’s okay, I will hang onto this.
But then finally, there gets to a point where you say, “Alright, well guess what? That is really where resistance is.” And we can look at this as a peak, a peak, and then a peak here. I was tempted to get into this, this morning. But then I am really looking at it and decided, Okay, first of all, what did my time sequence tell me? Second of all, where is true resistance here? True resistance is here, I have to respect resistance here, you have to.
My potential upside here is like $5.00. No thanks. The spreads on call options are a dollar, sometimes over a dollar and so going in, going out you have got essentially $2.00 of slippage, if you are buying in the spread you have got $1.00 of slippage, it is just not a really good risk/reward trade. You have got to get on these things early. And so I looked at that and decided, No, I’m not going to play that game. I am going to stick with the Fibonacci time zone here. I am looking now at this stock as very, very suspect. Not to reverse but just not to really move higher before it starts consolidating.
So at this point, frankly, this would be my suggestion: Just reload. Wait for the stock to come back down. At some point in September this stock is going to come down it always has before. If it doesn’t, then you can say I didn’t know what I was talking about. But the stock will come back down, it always does. Wait for the next tag of the 20-day moving average and then just do it again.
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