Sunday, November 15, 2009

Day Trade - Amazon.com, Inc. (Public, NASDAQ:AMZN)

Thursday night we said that each time AMZN tests it's 50 SMA on the 15 minute timeframe, it results in a higher high. We also said that a lower high under weak market conditions could setup a shorting opp.

Friday's market conditions were not weak with each of the three major spiders SPY, DIA and QQQQ printing inside days on lighter volume (consolidation). AMZN set up a long when it found support in the ambush zone of the last leg up, after breaching the 50 SMA and snapping back as depicted on the 15 min. chart above.

The reversal back up was on light volume, so we suspected a short was setting up when price could not hold R2 (blue line), resulting in a lower high from the PDH. As depicted on the 5 minute chart below, we partialled out at the initial sign of weakness and after another lower high, we exit the balance of the position and shorted simultaneously. Volume on the short side wasn't enough to get past the median daily pivot P (black line) and the short trade was stopped out for a small gain.

Price moved all the way back up to the initial base on accelerating volume, so we took a long entry into the close. Once the intrday high was taken out, the shorts were in a squeeze which propels price higher at a much faster rate.

From the daily chart below, we see a flag pole (high volume)/ flag (declining volume) and BO ie. extension. The only caveat is the lack of volume on the extension. Volume increased on the BO day, but has since failed to follow through, so price is moving slowly. This looked to be setting up as a failed BO and that's why I said I would look to short on a lower high if the markets were weak. Now we adjust the strategy because if there's a big enough short float, price could move higher faster. If that pans out, we'll wait for a euphoric volume spike before we attempt to short AMZN. For now, buying pullbacks is the way to go.

7 comments:

Day Tradr said...

Nice observation about the 50-EMA and nice trades in AMZN.

Day Tradr said...

50-EMA should read as 50 SMA

john said...

You made more than 100% of the movement during the early noise, and then caught the break higher ...all on a day where you started out inclined to the short side! Nicely done.

Jamie said...

Thanks guys,

The focus list is very slim these days, so I can really spend a lot of time on a few charts.

From experience, I've noticed that if a stock reverses with an uptick in volume before 3:15 EST, it can run into the close. Most stocks on my WL were just chopping around, but AMZN met all the criteria.

smacrina said...

What stocks are on your WL these days?

Jamie said...

smacrina,

I'm concentrating on the sectors and stocks I've highlighted on the blog since beginning of November, mainly gold, internet sectors plus occasionally oil on weak dollar, and more specifically AMZN, AMGN, ABX, AEM, RIMM, CNQ, SU, and also POT.

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