Don’t buy Amazon (AMZN). The stock is down $44 bucks today…but it’s still not right to buy. I explain tonight. (September 05, 2018)
AMZN
Don’t buy Amazon ( NASDAQ: AMZN ). Here’s the deal: The stock is down $44.00 today. That’s pretty big, down 2 percent; it doesn’t happen that often; right? But it does happen. Ultimately, I saw somebody, I think it was on a tweet, somebody that I follow said, “I spent a couple hundred thousand dollars on an advanced degree in whatever it was and all I really needed to do was learn how to do was draw lines.” There is actually a whole lot more to it but to the casual observer there is not a whole lot more to trading than that. The devil is in the details.
But if you just literally draw a straight line and know a few things about chart trading this is what you will see: This stock has been in this uptrend. The 20-day moving average, the little blue line here, there’s the 50 down here. The stock has been in this uptrend rebounding off the 20; moving up, establishing this line, these points here, right here, this one. So we have got a 3-point trendline; the stock continues to move up after it has moved down and rested, again, right around the 20. It touches the trendline again and again and again and again, all these times. And then pulls back to around the 20; touches the trendline again. Guys, this is a solid dang trendline right here.
So finally, last week, Boom! We get this breakout. That’s it, Amazon ( NASDAQ: AMZN ) is on a tear. Not so fast. This is what happens with stocks as well. When they break out the top of a channel, basically just like this, I’m not talking about a sideways channeling stock kind of thing. I am talking about an uptrend with a well-defined resistance channel. When a stock breaks out of that channel, that can, a lot of times, lead to a top. Whether it is the ultimate top, look, I doubt it, I don’t know, that’s above my pay grade, but at least a trading top.
That is what I see happening here. When you see a stock do this, where it breaks out the top of the channel, a lot of times this will be the aftermath. It will do what it is going to do; it will come back and test that channel. Like prior resistance is new support, it will come back up but it will NOT eclipse the last high. It won’t make it up to this level and then it will roll over and come all the way down to test the bottom of the channel, here, just the 50-day moving average.
Amazon ( NASDAQ: AMZN ) could do that. You could say, “Oh my gosh! It would never pull back that far!” Dude, just last month this was at 1850.00; it can do that. It could pull back to 1700.00, that is where it was in June. We don’t know how far this is going to go. I think it was Morgan Stanley but I could be wrong, it’s a new day, maybe it was JP Morgan; that analyst had like a 2035.00 price target on this stock for a year or something and they came up and hit it just last week.
So what I am saying is, this stock was up on specific reasons and now I think it is just catching its breath. Do not buy Amazon ( NASDAQ: AMZN ) here. I wouldn’t short it; and full disclosure, I own Amazon ( NASDAQ: AMZN ), a fairly decent position but it is in a long-term account. I am not going to trade every dang swing here. But if you are trading this stock or looking to buy call options or something like that, you can expect a little rebound tomorrow, or not. But what I am saying is, even if the stock does rebound I seriously doubt it’s got the juice to get above 2050.00, which is this high.
So stay away from Amazon ( NASDAQ: AMZN ) but set an alert. If the stock falls to 1950.00 definitely start looking hard at this stock. If it starts falling to 1926.00, that is the middle Bollinger Band, where it is right now, look even harder at this stock. If something happens and the stock winds up falling clear down to 1850.00 don’t look at the stock, buy every share you can get; that would be my analysis on Amazon ( NASDAQ: AMZN ), I hope it works for you. Free Chart