Tomorrow’s Prime Day at Amazon ($AMZN). Here’s my Prime Trade!! (October 12, 2020)AU
I want to look at Amazon ( NASDAQ: AMZN ) real quick today; I don’t have a lot of time. I really like the way this stock was trading last week. It had this little wedge pattern here that almost looked like it was setting up a short. This day here you’d say, “I could say maybe shorting this stock”; blasphemy I know, shorting Amazon ( NASDAQ: AMZN ), but it never really materialized.
When you are looking at a stock that looks like it’s setting up to go one way but then it goes another, that’s something that you want to pay attention to; because the stock is the only one that gets a vote, all you can do is go with the winner. So when the stock is doing this last week I am saying, “All right, maybe we are going to get more upside after all.” And then we actually did get more upside even though the stock closed lower relative to the open. It is still holding right around the 50-day moving average.
Now we’ve got Friday as kind of like deciding the rubber match; which way is this thing going to go? Well, there’s your answer right here, going into the afternoon this stock breaks out and it has a really, really nice close. So you are going into the weekend long and then, lo and behold, you wake up in the morning and you are very happy, I know I was. But then I will tell you what, towards the end of the day I actually took a little bit off the table, not a lot.
Tomorrow is Prime Day and so that gets everybody all lathered up, I’m sure there is something I will buy on Amazon ( NASDAQ: AMZN ) but it’s not going to be because of Prime Day, it’s just I always seem to find something to buy on Amazon ( NASDAQ: AMZN ), even if it’s coconut cream for my coffee.
What I would suggest doing here is, stay long this stock and use today’s intraday low of 3,339.00, we’ll call it 3,340.00; use 3,340.00 as your reference point for support. This stock should, on any kind of a pullback it should stay above 3,340.00. If it doesn’t, then you go ahead and ditch the stock. But my bet is, this is going to be a good trade for you. And by the way, if you are trading options on this you have to understand what your time frame is. For a long-term option position, this sucks, you don’t want to be doing that now.
But if you are saying, “Well, I would like to just swing trade the stock for a day or two.” Fine, buy the weekly options, they are actually plenty liquid and it will cost you a fraction of what buying the stock would cost you or going out and buying November or January calls, something like that. Maybe you sell a bull put spread underneath 3,200.00; but I have had some pretty good success trading the weekly options, frankly, for 15 or 20 minutes, that’s about it.