AMZN Update

I'm glad I closed the AMZN Calls that were hedging the equity short position, the plan thus far worked perfectly, the calls hedged the short, made +70% and the AMZN equity short is at break-even so the total AMZN position thus far has made about 50% of the AMZN core position (It's a weird way to look at it with the hedge and all, but it's doing well).

The point is, yesterday I considered looking at Puts today for AMZN just to juice the start of a move as the AMZN equity short is filled out, we have a little bounce brewing in the market and it looks like AMZN is going to benefit from that as well, it's what AMZN looks like after the bounce that determines whether or not puts will be added, but this is why I like the idea of not only possibly adding puts, but the equity short...

 If there's one thing I like to see when taking a position (even long, think about our first long in FB when everyone hated it ) it's a change in character, AMZN's recent volatility (yellow) which is where the last short was, is just what I like to see, the volume on those days is a bonus.

 This 2 hour chart is a very long, very strong map of underlying trade, from accumulation from December of 2011 through March of 2012, a big move, then distribution, a smaller accumulation area to support AMZN and an even larger distribution area. These charts, especially on the right side are hard for people to get their head around if we aren't moving in the direction of the signal which in this case is down big time, it takes some experience (which is what it should take) to start to understand and trust these. Luckily for me and maybe you, I have many years of experience in reading these.

 The 30 min chart shows where the add-to/last short was, you don't get much more timely than that and where I decided to put on a long options hedge.

 This shows what happened in to the upside correction, I'm glad those calls were closed yesterday.

 Here's the 1 min chart I mentioned in the last post about the market seeing an upside bounce and how it may be useful which I'll show you in the SPY next.

 Now I can't say where AMZN is going, but probabilities say down, whether it forms a large top at one of the trendlines, I don't know, with a trend that long, it deserves to, but that will largely depend on the tone of the market as it is the strongest gravitational pull on stocks in general on an every day basis (not including earnings). Check out advancers/decliners, you'll see the market's direction accounts for about 65% of the action in most stocks. Industry groups come next, the least influential is the actual stock which people have a really hard time coming to terms with because everyone looks at the stock when they should look at the market first, then industry groups and then pick a stock.

 If I show you this accumulation of AMZN over nearly a 2 year period (on and off), you can probably accept that it is true as AMZN has rallied ever since, but...

If I show you the complete picture, you might be able to accept the stage 1 accumulation because you see prices went up for a long time, you can probably accept #2 where there's some distribution because prices went down after that , you might accept #3 because again prices pulled back pretty hard, but #4 distribution is hard to accept because of where price is, but isn't that the point, but low/sell high? Did they not buy low?

So this is why I like AMZN short, but I've had the benefit of seeing how #4 turns out.