Here’s your Prime trade on Amazon ($AMZN) – August 2, 2024
Dan here at StockMarketMentor.com. I want to look at Amazon ( NASDAQ: AMZN ) today.
All the megas turned out to be, today, mega sloppy lately with NVIDIA ( NASDAQ: NVDA ). Apple ( NASDAQ: AAPL ) is actually better than most, at least it held in there. Then we’ve got Meta ( NASDAQ: META ), and even that app went wrong. Meta ( NASDAQ: META ) had great earnings, but now that’s back down below the 50-day moving average.
Microsoft ( NASDAQ: MSFT ), not really going well for that. Of course, CrowdStrike ( NASDAQ: CRWD ), which is my favorite chart because I think it’s as funny as hell, continues to go lower as well. At some point, it’s going to find support, but it isn’t there yet, probably next week at some point.
I don’t want to get into it here, but the question isn’t for a trader. The question should not be where support is, like when a stock is going to find support. The question should be, after I buy it what can I expect out of it? Because buying a stock at support doesn’t mean a darn thing if it just sits around there for a while.
What you want to buy is a stock that, yes, you want to get close to support. You want to get it at a good entry-level, but that entry level also needs to correspond, it needs to precede a run that actually makes it worth the risk that you’ve taken. So on a stock like this, of course, you can listen to Cramer and he’ll call the bottom all the way down, acting like a fool in the process. But you don’t want to do that because you want to make money, right?
That gets us back to Amazon ( NASDAQ: AMZN ). This thing took it really badly in the chin this morning, but you can see how the stock traded today. I’m just going to go into my intraday stuff. This is a 5-minute, I’ll make this a 15-minute, and we’ll put this at a 30-minute, and then this is a daily chart for reference.
You can see the stock really got hammered right at the open. It traded down and gave us that long tail, this long tail here. And then it traded up and it held through the rest of the day, and actually closed pretty close to the top of the day. The close was 167.56, at least that’s what I’m seeing now.
Let’s see when we just get regular hours, 167.90. The high of the day was 168.77, so this had really, really good price action throughout the day. I especially like the way it looks here on the 30-minute chart, which you want to be using this stuff for intraday trading and understanding what’s happening in the markets. We have intraday here, we’ve got this flat top on the 15-minute chart, we have a definite volatility squeeze, this is a really, really tight squeeze.
That takes me back to the daily chart because all the stuff that I just showed you, that’s like what has happened, not what’s going to happen and what you should do about it. What we see here is, this was a massive dump, 137 and a half million shares traded. Think about that in relation to the job numbers that were created last July, but I digress.
This is one big massive flush, a big massive dump that I think we probably haven’t seen this kind of volume since back here, clear back in 2022. I look at this, and this is a big flush, and this is my trade. The stock closed here at the high of the day, the intraday high is 168.77. The 200-day moving average is 168.53, so they are basically coincident.
I would suggest setting an alert, as I’m going to do right now on my handy-dandy little TC2000 tracking software. I would suggest setting an alert right there. You don’t have any advantage in buying now. If you bought it at where it is right now you get a .6 percent potential reward until it tests the top.
So wait until and unless the stock breaks out above 168.77 and then you can go ahead and take this stock because it is going to rebound at some point. I mean, all the economy and this and that and the other thing, it’s not going to keep Amazon ( NASDAQ: AMZN ) from filling some of this gap.
Whether it fills it all and runs on to victory, I have no idea. But I do know this pattern, I’ve seen it many times before. It’s a big long-handled hammer, wait for the stock to break out back above the 200-day moving average of above 168.77. Buy the stock, and set your stop, I would give it, at this point, I wouldn’t give it more than 2 percent.
Literally, if you’re buying it on the breakout you can keep a really, really tight stop on this because the only reason you’re buying it is because you think the breakout is going to make money. If instead, the breakout turns out to be a fake-out, which could happen if we get continued selling on Monday, then you don’t want to be in the stock. Because patterns aren’t predictors, they’re just views of the past.
Then you take the experience that you have, and the knowledge that you have and apply that to what you see. And then you make an estimate of what you think is going to happen. This is why they call they call it speculating. It’s why they call it trading as opposed to winning or money harvesting. If you want to do that, you can’t do that on Wall Street, unless you’re Andrew Left, but we’ll leave that scumbag for another day.
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