Here’s your trade on Amazon ($AMZN). (February 18, 2021)
AMZN
I want to look at Amazon ( NASDAQ: AMZN ). I have drawn these lines here, I was just going over this in our Strategy Session for premium members today, but I thought I would show it to you.
I really like the way Amazon ( NASDAQ: AMZN ) is trading. The reason is, not so much just because of this, because we see this kind of volatility all over the place. But to look at this chart in a longer range here going back to September, this is the box that it has been trading in but with each successive low they are getting higher. And each successive high they are getting lower, for the most part.
So you can see where this is really kind of a pinching pattern. In my view, it actually kind of started here. This is where the Bollinger Bands were very, very tight and then from that, the stock broke out. But then it has taken a while for the rest of this to be kind of wrung out, the rest of the supply to be wrung out. A sell-off, but it held at the 50-day moving average here. It rolls out here, comes back, holds at the 50. It rallies again, sells off, holds at the 50 and now we are running up here.
The reason I like this stock is that it gives you kind of a low-risk entry point. If you are looking at the 50 as a sound support level, people are buying at the 50-day moving average, then you keep your stop here. You keep it just a little bit below the 50-day moving average and then your risk is where you buy down to where your stop level is and this is your risk. So it is actually a pretty low-risk trade when you consider how far Amazon ( NASDAQ: AMZN ) can go if it really does start running.
The weekly chart gives you kind of a better view of it as far as what really tends to happen with Amazon ( NASDAQ: AMZN ). This thing can consolidate for quite a while, and guess what? It has. And so if this sucker breaks out, I will say, above 3400.00, you could see a big move in this stock in not too much time. I like Amazon ( NASDAQ: AMZN ) right here.
At Option Market Mentor, we have a couple of positions on it. I put on a bull put spread and then I also put on a bull call spread, a debit spread, where I buy a call at a certain price and then I sell at a higher price to finance the purchase, and they are both working pretty well.
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