Looking for an Amazonian trade? Can’t help you with that…but here’s a more modest trade on Amazon (AMZN). (October 08, 2018)
AMZN STMP AMZN
Amazon ( NASDAQ: AMZN ), this is the high, right here. Since that high the stock is down, not that big a deal, less than 10 percent. But what has got me concerned about this is, it’s looking double toppy.
It has been a bad thing to be to be counting out Amazon ( NASDAQ: AMZN ) in the past. We have seen this type of a sell-of, this type of a sell-off. They all look horrible and this one, by the way, was well below the 50-day moving average and then from the bottom look what happened, the thing went up 50 percent.
So I am not saying this is the top in Amazon ( NASDAQ: AMZN ), get out. But what I am saying is, this is a problem area here because this was a lower high, relative to this. And this, today, was a lower low relative to this; so we’ve got a lower high and a lower low. That means that the uptrend is in trouble; it doesn’t mean that it’s over but it means that it is in trouble and I want you to pay attention to that.
Here is what I would suggest doing: If you are an active trader; if you are not an active trader then you just need to stand aside, I wouldn’t do anything on this stock. But if you are an active trader you watch and see how the stock trades tomorrow. If it trades above it’s open, which was, we’ll say it is 1875.00, if it starts trading above it’s open then maybe you buy some calls on this or something like that but only look to trade it for maybe 15 points, maybe 20 points if you are buying it at 1875.00. And then it gets up to 1900.00, then that is when you would liquidate that position or at least have tight stops maybe sell half, that type thing. You only want to be long the stock if the stock trades above today’s intraday high.
Now, what if it does trade above the intraday high and move up a bit? Well, I am telling you, if it does that the stock really needs to move up to a new high here. If it does not then we have got a real problem with this stock and this could indeed be the end of the road for this move. I want you to be really careful here. Short-term traders, that’s your criteria for taking this stock long.
As far as taking it short, that is always problematic. It typically has not rewarded short sellers. Only if it rallies up above the 50 and then rolls over would I even consider selling Amazon ( NASDAQ: AMZN ). If that is your deal, that’s your deal. Me, I am just looking for long entries to define my time frame and then also exit so that I can get out with a reasonable profit.
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