Is Amazon (AMZN) primed for a breakout? I think so. (July 10, 2017)
Amazon ( NASDAQ:AMZN ); this is a pretty interesting situation right now. You can see the resistance level, really? Short-term it is $1000.00, but it is really up about 1010.00, maybe a little bit higher. I like the stock, I actually have a fairly decent size call position in it now. Here is why: Even though the stock is up against $1000.00 we really need to see that stock breakthrough that level. Sometime tonight Amazon ( NASDAQ:AMZN ) starts their Prime Day, which is kind of like Nordstrom’s half yearly sale only more better.
So with that I kind of expect good news tomorrow; I just expect there to be a real buzz around it. I could be wrong, it is not going to cost me that much money if I am, but I really feel like the stock is going to pop up above $1000.00 tomorrow. And if it does that, frankly, your trade is the options, because even if the stock moves up to 1020.00. Big whoop! It is 2 percent. If it does this, the June 1000.00 calls, if this thing keeps moving up 10 points, certainly 20, you have got a least a double on your hands as opposed to a 1 percent move in the stock. If the stock trades above 1000.00, and if it holds above there; it really needs to hold above that level, if it trades above 1000.00 then I think we have got a good trade going. It is likely to go a significantly amount higher.
Here is the thing, I taught a webinar just last week (I think it was) on these pivot points with R1, 2, 3 for resistance. It is stuff that floor traders used to use, it is amazing how accurate this stuff is. So the stock pops up today right to the second resistance level (R2), kind of flits around for a little bit, comes up and blasts right through the third resistance level (R3), which is really, really impressive for a stock to do that, and then it stays up there. So THAT is a really good thing.
Now these levels are going to be different tomorrow but what I am saying is, this is some real buying. When the stock gaps up and ultimately stays above the third resistance level (R3) and at the same time the VWAP, which is volume weighted average price; it is like, where did the stock trade according to how much volume was there? When it trades so far above the VWAP and it just stays that way, it tells you that traders are saying, “Screw it! I am going to buy this stock. I am not going to wait for it to come back down to this.” It is kind of more of an important moving average, because this is where the trading activity takes place, at the volume weighted average price, and it has taken place clear above this.