Here's the daily on AMZN, the area in white is ugly and I believe I mentioned AMZN is a candidate for a phased in short position-THIS IS NOT DOLLAR COST AVERAGING! DCA is a losing strategy of adding to a losing trade, phasing in is a plan that you make BEFORE you enter the trade. The reason I would consider AMZN for a phased entry is because it is in such a weak position right now, I'm not comfortable saying, "Wait for a bounce". There are a lot of ways of doing this, but an east example would be to figure your stop and how many shares you can afford near that stop (the 2% rule/position sizing) and take maybe 1/3 of a position here, add 1/3 when/if AMZN bounces and the bounce is under distribution meaning the bounce looks like it is nearly over. Add the final 1/3rd when you have downside confirmation , like when AMZN breaks below long term support around the $175 area. With this kind of entry you have a position in case it just breaks down, but you also have allowed enough room in your risk management to add to the position at better prices and you aren't at risk of a large loss as you have already made risk management plans based on higher levels (bounce levels).
Ultimately you are leaving room to get better positioning and finally you are entering the full position when you have confirmation on your side. There's plenty of room below so trying to time the top of a bounce is just ego, it's not good trading strategy.
The daily 3C chart of AMZN shows distribution in the top and from there, AMZN broke down below support and saw the typical bounce that we often see on an important break of support. It remains in a leading negative position which is deadly for a stock when this happens on a daily chart, that's a lot of distribution which includes institutional short selling.
The 2 min chart doesn't show a very strong likelihood of a bounce.
The 5 min chart rolled over on the bounce after the break of support on a negative divergence, currently there is a small positive , relative divergence in a flat area of trade, so this is the best case bounce scenario.
The two areas I would be paying attention to on any bounce would be the $190's area where there is a small gap and then the $200 area which would be a psychological area as it is a whole number and would also leave open the possibility of a head fake. If there were a head fake around that area, I would consider that a strong short signal and maybe even enter the remaining 2/3rds of a phased entry right there as a head fake is almost always the last thing we see before a stock makes a major reversal.
So we want these trades to come to us, not to chase them and be right on direction, but get stopped out on a bad entry.
Keep AMZN on your radar. I'm nearly sure the holiday season for retail including Black Friday is going t be a big disappointment.
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