AMZN has been one of my favorite stocks to trade for the past three years. It usually offers excellent price action for a few days before and after its quarterly earnings report. I have found that watching it trade in the after market once it releases its numbers is very instructive for the next trading day.
Immediately following the release of its numbers AMZN droppped a few points. But frankly I was somewhat surprised that the down move wasn’t more vicious. It basically reported an in line number, which usually would result in it getting pummeled.
The first identifiable seller appeared at 89.50. It quickly traded down to 88. When it traded back up to 89.50 it appeared to be a great opportunity to enter a short trade. But the seller suddenly lifted and it quickly traded above 90 forcing our traders who were short to cover their positions.
AMZN then traded below 89.50 again and the offer did not lift. Then a large seller held the offer at 88.80 which resulted in the stock trading down to 87 fairly quickly. Eventually AMZN traded down to 85 where it put in a double bottom. Its failure to hold below 85 caused our traders who were short to cover their positions. Over the course of the next hour it traded all the way back to 88. It closed after hours trading at 87.66
I don’t consider the after hours session to be particularly bearish. Clearly the gains that AMZN made during the regular trading session were erased but it closed almost 3 points above its after market low. In the premarket tomorrow I will pay close attention to the 87 level. If it holds below I will look to get short and cover at 85 until it proves it can hold lower. If it holds above 87 then I will be long and look at 88 and 88.80 for resistance.
Right on the Open I will be quick to take profits on both the long and short side as there is a high probability of at least two reversals prior to it establishing a trend for the day.
11 Comments on “AMZN Tomorrow”
Excellent commentary… thank you.
Excellent commentary… thank you.
I would be looking for $85 (10% move) tomorrow …
I would be looking for $85 (10% move) tomorrow …
I took a short at 87 today (great minds think alike?), closed half at 86, but closed out 2nd half at around 87 just before the program trading started.
Good call via Twitter today on that [email protected]. You probably cover this in your training, but a blog entry about that manipulation would be awesome.
I know enough to spot it, and avoid trading during it, but not enough to really write about.
I took a short at 87 today (great minds think alike?), closed half at 86, but closed out 2nd half at around 87 just before the program trading started.
Good call via Twitter today on that [email protected]. You probably cover this in your training, but a blog entry about that manipulation would be awesome.
I know enough to spot it, and avoid trading during it, but not enough to really write about.
What do you think about AMZN purchasing Zappos in a cash/stock deal?
To me, this seems like a good thing for AMZN.
What do you think about AMZN purchasing Zappos in a cash/stock deal?
To me, this seems like a good thing for AMZN.
Travis,
I try not to get too involved in analyzing the fundamentals. I am more interested in the price action that follows a significant fundamental event.
The Zappos purchase price only represented about 2% of AMZN’s market cap but led to a significant rally in the stock prior to the release of their numbers on Thursday. This seems to indicate the market liked the transaction.
sspencer,
Thanks for the response, it is greatly appreciated.
I learned about SMB Capital after watching Wall Street Warriors on Hulu and have started to read this blog ever since.
I’m still a minor and only trading with limited funds in a Scottrade custodial account. I have learned that I enjoy investing but I think I’m focusing more on the fundamentals as of now.
Thanks again. Keep up the interesting blog posts.
sspencer,
Thanks for the response, it is greatly appreciated.
I learned about SMB Capital after watching Wall Street Warriors on Hulu and have started to read this blog ever since.
I’m still a minor and only trading with limited funds in a Scottrade custodial account. I have learned that I enjoy investing but I think I’m focusing more on the fundamentals as of now.
Thanks again. Keep up the interesting blog posts.