Amazon (AMZN) broke $1840 today but then sold off into the close. My impression is that this is a “blowoff top”. But we won’t really know the score until Wednesday when the results of Prime Day are released. (July 16, 2018)AMZN
I want to look at Amazon ( NASDAQ: AMZN ) in this video. This is an hour chart here. You can see how the stock has been up really, really nicely. Before the 4th of July you had this little kind of “brain fade” here but since that time the stock has just been trading sideways. So what happened? This is 3:00, this is when Prime Day officially kicked off, 3:00 Eastern Time. Right at about 2:40 or so (we will look at the 15-minute chart anyway to get this thing nailed down), the stock started trading sideways and then it started to trade down differently than it has before because this is kind of a volatile stock.
So I was looking at this and I’m thinking, Okay, we know that ultimately this kind of a move is going to end badly for the bulls but we just don’t know when it is. It is looking to me like maybe the stock is being sold, kind of the prototype of the “buy the rumor or sell the news” or as I like to say, “Buy the anticipation, sell the event.” The stock is coming all the way up here, up and up and up and up. And then just shortly before “Prime” starts the stock starts selling off and then we see this, now it is way down here.
If we look at the 15-minute chart you can see what I am talking about. Here is 2:15, 2:30 so this was the point, this kind of little, I guess you could call it a three candle reversal, this area right there. Then once this stock starts ticking down you have to look at this, you look at the time of day and say, “I think it’s time to get out of Dodge here.” So you sell your position and then you miss out on this kind of move. That is called just “managing your risk intraday.” Managing your risk instead of just looking at one chart or just assuming that Amazon ( NASDAQ: AMZN ) is going to go up forever. You have got to look around you and see when is the true event? Is it when Amazon ( NASDAQ: AMZN ) reports their NUMBERS on Wednesday? Or is it when the starter pistol fires? And it is when the starting pistol fires.
Right now we get this big sell-off here and part of that reason is, as I look at it is, because I tried to get on Amazon ( NASDAQ: AMZN ) just to check on some things, an order that I had actually having to do with this trip, and I couldn’t get on because the website crashed. I don’t know, a while ago their website crashed several years ago and it cost them something like 140 million dollars in a very short period of time, like 40-minutes maybe less, you could Google it. The problem here is, Amazon ( NASDAQ: AMZN ) is having a hard time handling all the business.
Now, is that a bad thing? Well, I live to have that problem because if I have so many people logging into Stock Market Mentor that we don’t have enough bandwidth, well we will get some more bandwidth, not a problem. So this is not necessarily a bad thing, though it does cost Amazon ( NASDAQ: AMZN ) money in terms of revenues that aren’t there. But you think about it, are people going to say, “Oh, darn it. Amazon crashes. Gosh, it does this all the time. I think I will go over to Target and buy something.” No, they just wait, it always happens that way.
So with Amazon ( NASDAQ: AMZN ) I think the deal is, what is your trade? What is your trading time frame? This $1800.00 seems like a magnet for the stock. But if you look at the daily chart I think what you are going to see it this level here, there are a lot of sellers here. There is going to be a lot of supply in-between 1800.00 and 1840.00.
If you look at the daily chart you will see why. This stock has been up almost constantly and so volume is increasing. This kind of looks like a “blowoff top” to me. It looks like an absolute blowoff top where the stock is in and in and up and up and up. And finally, the “Last of the Mohicans” jump in about half an hour or 45-minutes before the Super Bowl starts (mixing a lot of metaphors there). That is really what we are looking at here and it would not surprise me to see Amazon ( NASDAQ: AMZN ) pullback quite a bit tomorrow.
So what I am telling you is, I can’t predict which way the stock is going to go. I can just analyze where it has been and give you my ideas and I am doing that. What I am telling you is, make sure you manage your risk and being bullish, being really wildly enthusiastic about Amazon ( NASDAQ: AMZN ) is fine here, even here. “Oh, I think it is going to go higher.” And we have been on this pretty good at Stock Market Mentor; I think it is going to go higher.
After all this time, now it is at 1822.00 or more like 1800.00 now, what is your “tense”? Is it past tense or present tense or future tense? It is different than it was back here so to say, “Oh, I think Amazon is going to go higher.” Why? Because that is what you thought back here? It DID go higher. At some point you have to say, “You know what? I think it has made its move. Thank you sir, may I have another?” So I would be lightening up in this move right here. If Amazon ( NASDAQ: AMZN ) rallies tomorrow, if you own some stock or if you own some call options, frankly I would be selling them. That is my take.