Are you buying Amazon (AMZN) on this pullback? Free shipping for Prime members. Here’s my take. (July 31, 2017)
It looks like it is the last time Amazon ( NASDAQ:AMZN ) is hitting $1000.00, for a while anyway. You can’t argue with the uptrend in this stock if you are looking at it in this time frame, crushing it. But, on the daily chart, not all tags of the 50-day moving average are created equal. Here, this would be a good one. This one, a breakout would be a good one. This one started to get a little bit dicey, but if you bought it you are making money, not a lot of it but a little bit, 6 or 7 percent. This time around, sure. But you can see what has been happening, not literally but figuratively.
You can see what has been happening here. After this volatility squeeze breakout the stock was behaving in a fairly orderly manner. Just look at the 20-day moving average, right along here. This is a really nice uptrend, when it is just kind of oscillating back and forth in the upper half of the Bollinger Band complex. In between the 20-day moving average and two standard deviations. That is what strong stocks, that is what healthy stocks look like. But then, when they start chopping around here, that is different. Markets do this, and they do this. When you are trading in here, like you were back here, you are going to wind up losing money because the market dynamics change.
So it is with Amazon ( NASDAQ:AMZN ). We had a really nice uptrend here, but then it started to get really choppy. Everybody gets all lathered up about how much money Jeff Bezos is worth, as if the guy even keeps track anymore, I don’t know if he does. He probably farms that out and has somebody else keeping track of how rich he is. This stock breaks down here, and then on this kind of move today, this is three big days of selling. They report earnings, company gaps down and of course, yes, sure, it closes higher than it opened. But that was pretty short-lived, wasn’t it? So over the last three days we have had massive volume here. I can’t even really look at this, though, as capitulation.
By the way, I own Amazon ( NASDAQ:AMZN ) in a long-term account so I am not exactly talking my book, you don’t want to be buying this stock here. I could see Amazon ( NASDAQ:AMZN ) easily falling down to test this level. And by the way, it could do that and even surpass that level, in other words, fall below this level. This thing could fall another 10 percent and all it would ultimately do was give somebody a good buying opportunity. This is a stock that just seems to go up forever. Memo to the unrealistic bulls: It is not going to go up forever. At some point it will stop, it just doesn’t seem like this is it.
As far as pausing, you want to be careful about Amazon ( NASDAQ:AMZN ). This could easily fall back to this level even, below 900.00. There is nothing wrong with the trend, anymore than there was here, even here. So long-term, sure, I am bullish on Amazon ( NASDAQ:AMZN ). But short-term, which is all that really matters since you don’t get to take a long-term action, you can only do a short-term action, and that is whenever you are doing it. You don’t want to buy this stock now.
I was short this stock for a while today by being long puts. I am usually a seller of options not a buyer, but I was short this thing. I covered because it is just so volatile, and if you have got money you might as well keep it. But if this stock starts moving lower ultimately as I expect it to do, I think you want to continue to be short this stock. And one way you could do it, if you are an option trader, is sell way out of the money calls. I don’t know what Jeff can do in order to get the stock back up into this range. It is just undergone so much selling pressure that I really think this is now defining supply; any rally higher is probably going to be met with some selling. Anyway, that is the long and the short of it on Amazon ( NASDAQ:AMZN ).