Thinking of buying Amazon (AMZN)? Here’s my take on it. (June 12, 2017)


We are getting an interesting situation here in the market. A lot of these high tech, high flying mega cap tech names, whatever you want to call it, I am so tired of calling them the FANG stocks. It was interesting a year or two ago, now it just seems silly. But that is just me.

Amazon ( NASDAQ:AMZN ) is looking really interesting. A lot of these stocks are still in an uptrend, no question about it. But they took such a hit on Friday that it would be surprising to me if these stocks continued lower, it just would. Now, it wouldn’t surprise me if at sometime over the next month or two Amazon ( NASDAQ:AMZN ) hit 900.00. Just like it wouldn’t surprise me if sometime over the next month or two it hit 1200.00, it is just that kind of market right now.

If you look at these charts, the weekly chart shows a definite clear trend higher. An uptrend that is still working, no reason for it not to continue to work. But what I am talking about right now is short-term stuff. I am not talking about long-term stuff. Piper Jaffary, and this doesn’t really matter but it is a news headline, they raised their price target from, I think it was 1040.00 or 1050.00 up to 1200.00. Piper Jaffary isn’t going to move a stock, unless there is absolutely nothing else happening, but still, it is a bullish call. That’s great.

You know what I think is bullish? This bounce off the 50-day moving average. Friday it fell down below it, did regain it, lets just say it gets your attention. Then today, the fact that the stock gapped down with the rest of the Nasdaq and traded down and DID NOT even come close to testing this low. It didn’t even come close to testing Friday’s intraday low of 927.00. It held above this 50-day moving average. I am looking at this as a short-term buying opportunity. You do that in a number of ways, you can just buy the stock if you want, you buy calls on the stock, maybe the July 960.00 call. This is for a short trade. This is a trade that I am looking for, kind of a reversion of the mean, a test of their close of 978.00, just a fairly quick 13, 14 points or something like that; which when you are trading options 13 or 14 points is a good move.

So, you buy calls on this, you can certainly buy the stock or you sell a bull put spread. The volatility right now is actually fairly high for Amazon ( NASDAQ:AMZN ), relative to Amazon ( NASDAQ:AMZN ). Usually these stocks just don’t have that high implied volatility and you can’t get much for selling the options. But here this move is so clear that I think you can get away with selling some out of the money options. Assume that the stock is going to stay in this green trading box, which I do. And then just trade the outsides here.

So I think Amazon ( NASDAQ:AMZN ) is going to get a move for a couple of days. Beyond that, my outlook hasn’t changed. Sooner or later one day Jeff Bezos is going to rule the world. It is not going to be this year. It is not going to be next year. But as big as Amazon ( NASDAQ:AMZN ) is getting, trust me, that day is coming.

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