So You Want to Short Amazon, Read This or Be Doomed

• Posted by Greg Harmon
• on March 5th, 2013

Amazon.com. $AMZN, is one of those stocks that value investors will never own since it trades at a PE multiple of close to infinity. That is fine, you do not have to own every stock. But it becomes a whole new ball game when you decide that you should short it. If you are shorting it just because of the PE ratio then stock reading, get your check book and right me a check for whatever you were going to put into the stock. You will end up in the same position and I will have a lot of fun. Maybe if I instagram some pictures you will also get some enjoyment out of it. If you want to short it because the market has run up a lot and sentiment is getting bullish then read on. There are at least 7 reasons not to short this stock. Incidentally they are the same 7 reasons to buy the stock here.

1. This one is obvious, the price is moving up.

2. It is above all of the Simple Moving Averages (SMA)

3. As it is pressing higher, the Bollinger bands are opening up for the move.

4. The Relative Strength Index (RSI) is in bullish territory and rising.

5. It has $10 higehr to go before it meets the next resistance, completing a ‘W’ pattern.

6. The Moving Average Convergence Divergence indicator (MACD) has a signal line that has crossed and is moving higher after leveling, turning the histogram positive.

7. The Accumulation/Distribution statistic is also rising after basing throughout February.

If you do not want to ride this train higher that is fine. But please don’t let it take all of your money trying to short it.

Join the Dragonfly Capital Views Premium Membership

Sign up here to get deeper analysis and nearly 50 trade ideas every week.

Dragonfly Capital Views Performance Through February 2013 Expiry

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.

blog comments powered by Disqus