4 Trade Ideas for Amazon: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Amazon, $AMZN, dropped over 25% when the economy shut down in March of last year. It recovered quickly, retracing the drop by the middle of April. It consolidated for a short time and then rose to a high, extending the retracement to 300% of the drop. It eventually continued to a 338.2% extension at the beginning of September before pulling back. The stock has been stuck in a range between 2900 and 3550 since. Rangebound for over a year.

It comes into the new week moving toward the top of the range though with a RSI strong and rising in the bullish zone and a MACD turning up and positive. Perhaps this time it will break the range. And if it does the old trading adage goes “the bigger the base, the higher into space”. During the course of the flat spell price has come back into contact with the 200 day SMA. In fact, the 20, 50 and 200 day SMA’s are all very close to each other and were very tight when this last move higher began about a month ago. There is resistance at 3525 and 3550. Support lower comes at 3460 and 3400 then 3300 and 3185 before 3130. Short interest is low at 1.1%.

The stock does not pay a dividend, and the company is expected to report earnings next on July 28th after the close. The July options chain shows the largest open interest at the 3400 put strike and at the 3500 call strike. The July 30 Expiry chain has biggest open interest at the 3460 and then 3400 puts, but at the 3600 and 3700 calls. The August chain has biggest open interest at the 3300 and 3250 puts, but large at 3500. On the call side it is much bigger at 3500 and 4000. September options have biggest open interest at the 3200 put and 3600 call.

Amazon, Ticker: $AMZN

Trade Idea 1: Buy the stock on a move over 3550 with a stop at 3400.

Trade Idea 2: Buy the stock on a move over 3550 and add an August 3500/3400 Put Spread ($44.50) while selling the September 3900 Calls ($43).

Trade Idea 3: Buy the July/August 3600 Call Calendar ($77) and sell the July 3400 Put ($16).

Trade Idea 4: Buy the August 3100/3600/3700 Call Spread Risk Reversal (free).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the books closed on the 2nd Quarter and heading into the 4th of July weekend, sees equity markets looking very strong on the large cap and tech focused indexes.

Elsewhere look for Gold to possibly move back higher while Crude Oil continues the uptrend. The US Dollar Index continues to rise in broad consolidation while US Treasuries pause in their reversal higher. The Shanghai Composite looks to remain in broad consolidation while Emerging Markets consolidate broadly over long term support.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe with the SPY and QQQ re-invigorating uptrends while the IWM continues to hold up in consolidation. On the shorter timeframe both the QQQ and SPY are running high on momentum measures so both could see a short term consolidation or digestive move. The tight Bollinger Bands® on the IWM might play a role then. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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