AMZN

Originally Written: Fri, Jul 25, 2014 at 7:02 PM.

Note that this is not a recommendation to buy or sell anything. Risk your money at your own peril.

Today, amazon posted some terrible earnings. Well, really it was their costs that were the issue, as this guy details fairly well. The point is, amazon’s stock dropped ~10% in a day. Yikes!
 
All of that is interesting and all, but I don’t trade stock fundamentals (which earnings reports are), I do technical analysis. So, I got out my marker and looked at the chart (attached).
 
What’s interesting about the technicals, is that they clearly forecast Amazon’s stock drop, despite the fact that no one but insiders knew that amazon was going to post terrible earnings. Now, obviously technical analysis wouldn’t have told you that you’d make 10% on July 25th if you shorted, but in late March, the price action indicated a pretty clear bear market had begun. And if you’ll notice, the recent price gains through March, June, and July are all standard fare secondary reaction trends, with the added bonus of coming to a halt pretty near a semi-clear resistance area.
 
And that’s not all! Bear markets generally last for at least a year, sometimes up to 3 years, and in order for this bear market to continue (which it should), amazon has at minimum, another $25 to drop. Most likely, it will drop more than that, but unfortunately I know of no way to predict the future exactly.
 
Take homes:
– Price movement discounts unforeseen ‘act of god’ and other BAD NEWS
– Amazon *may* be worth shorting if you are into that kind of thing.
 
AMZN 3y 07-25-2014
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