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Oppty: Amazon -- Prime(time) to Buy?

Updated: Jul 31, 2019

AMZN is down roughly 6% from its highs on the 15th of July this year. Regardless of the knee jerk reaction due to earnings, subscribers, tariffs, moon cycles, etc -- Do you actually think Amazon is past its Prime? Or, is this a steep enough discount to purchase one of the most, if not, the most innovative companies of all-time? Better yet, do you think Bezos would buy here?

There are no correct answers to these questions but by asking them it should help clarify or at least flesh out whether you as an investor would be intrigued enough to take the plunge at these levels. Perhaps it simply provides a moment to consider becoming a shareholder. Maybe you already own this stock and believe its peaked because there was zero follow-through after it tested the previous all-time highs from 2018.

Fortunately, we have tools available that can help us to manage risk and gauge the temperature of the water if we do choose to jump into this company head first.

Let's take a look at some charts...notice how in the image below (60 minute time frame), if you isolate your perspective from July 15th to current day Amazon has essentially sold off for half a month? Should this be concerning given the earnings just came out?

Or, if you look at the next chart below (daily time frame) its essentially rallied since Christmas Eve of last year. Does that make sense? Isn't it interesting how if you simply alter the time frame it gives you a dramatically different perspective?

Furthermore, if you zoom out on the daily and start from 2015 to present day its easy to see how my four year old son could and would say AMZN is going up.

Rather than over simplifying this oppty to "its going up, so buy." Let's dig a little deeper into the mechanics which are illustrated below.

There is an old saying on Wall Street "buy the rumor and sell the news." But in this case, you could buy the news (a drop in price here) at current levels or wait for it to deteriorate a little further (if it doesn't rally from here) and protect yourself with a stop-loss below 1660-ish. Or, if you wanted to wait for a better value area (more in-line with Buffett) consider investing at 1680-ish and protect that purchase around 1540-ish.

Does that make sense? Can you see any behavior's repeating (see blue & green lines)?

As always, there is so much more to see on charts like these and a king's ransom of information we can observe to make more sound decisions as investors -- Want to learn more? See more? Let's have a quick chat or sign up today risk free.

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