20:1 split for Amazon ($AMZN). Now what? (June 06, 2022)AMZN
Dan Fitzpatrick here, stockmarketmentor.com, on “Unhappy Monday” if you bought Amazon ( NASDAQ: AMZN ) on the stock split; 20-1, this is the first time this thing has traded in 3 figures in quite a while.
If we look at the weekly chart you can see this is up, this is awesome. If you got it down here in anticipation of this, fantastic. We can see, I’m just giving you the bull case, we can see what I would call a W pattern, a bullish W pattern, where we will start again. Here this thing had been trading down along the lower Bollinger Band.
This is just a standard Bollinger Band analysis like John Bollinger would do it, it came pretty close to the lower Bollinger Band, right? Then it runs up, not that close to the middle Bollinger Band, it had a ways to go, and then it falls back down. It hit about the same level as this did, I think it kind of undercut it just slightly but not even for a day and then we started rallying again.
Now, this time this was well above this lower Bollinger Band. So relative to the Bollinger Bands, which are standard deviation stuff, you have got to pay attention to this stuff. Relative to the Bollinger Bands even though this was a lower nominal low, meaning it went lower in price, it was actually a higher low relative to the Bollinger Bands. But wait, there’s more. Then we get this move up after the V and then a pullback to get to that point that I just mentioned, where it kind of barely undercut here and then we start getting a move to the upside.
Now, to complete the W pattern this thing had to go above this level here. So actually, depending on how close you want to squint, it really kind of became a reversal buy point. It would have been late relative to others, but look, we are looking at this in W and M here. It would have been a real buy point right here on Friday or first thing on Monday of last week.
And so the stock continues higher, it’s all good. And then today, we get a gap up and then a run-up to almost 130.00 but then a pullback to where the stock, yes it’s closed higher than it closed on Friday, that’s a good thing, and it actually traded higher intraday than it has, I don’t know, since April on the way down. So this was actually a pretty bullish indication right here. But if you are looking at it intraday, not so much. The initial move higher and then a pullback to the volume-weighted average price, and then it never got back above there.
So what is my take on Amazon ( NASDAQ: AMZN ) now? I think you have got to get back to the weekly chart. This thing is a busted stock, stock splits can impact the way a stock moves after a big split, especially one like this. It makes it easier to trade options on this, you can sell calls against your stock, you can write covered calls, that type of thing.
But as far as increasing the value of the company, you should know, I’m sure you do, that it doesn’t mean anything. If you got one share at $100.00 and then the company splits the stock 2-for-1, then you don’t have 1 share at $100.00 you have 2 shares at $50.00 each, the math is still the same.
So here, as I look at Amazon ( NASDAQ: AMZN ) on this weekly chart, I kind of see a stock that is probably going to need some time to rest. On the daily chart, I would say it is the same thing. While ultimately this could move higher from here, I had a different take on it this morning when it first started moving up. It gapped up, then it came down, and then it broke through this level, and I thought, we’re off to the races here. The thing goes up nicely for about 2 percent more and then it started falling back down.
I was actually looking for higher prices here, I was, and I didn’t get them. And so now, do you know what? I am just kind of on the sidelines watching and waiting. And also know this, that this is one ticker out of a thousand. At this point, I think it is probably going to be a ticker that is on the sidelines for me.