June 11, 2014

Show Me the Money! Wednesday’s Chart, $AMZN

toerrishumanI often wonder if to err is actually human and to forgive divine.  I mean give me a break on the timing of Goldman’s upgrade to a ‘conviction buy’ from ‘buy’ on AMZN.  I suppose the word ‘conviction was the key to making a decision to jump in.  Timing remains important as new longs may have to wait to see another 10% jump in price.


I’m not sure what the excuse to run PCLN up $25 to $1250 was – maybe the company also plans to throw its hat in the ring with a PayPal like product or maybe there is some collusion going on between NFLX and PCLN since they both seem to get goosed at the same time.   The problem with stopping to figure it all out in the “heat of the moment” is that it draws all your attention away from actually trading.  But I love the conversation after —

The broader indexes did take their time but eventually the sellers moved in across the board.  The tech heavy NDX, though, held to higher levels on the back of the continued rotation into AMZN, NFLX, and PCLN with additional capital flowing into RMBS, SYNA (up 28% on Wednesday) and MU.  It was flock back to tech day – and that gave the NDX all the support it needed to keep downside very limited.

Here is a synopsis of the news on some of the tech stocks mentioned today:


$SYNA – announced an acquisition and upped the fourth-quarter sales outlook estimate $25 million.  That equated to a 28% jump to all time new highs at $86.70 before closing at $85.80.  Technically, the stock gapped higher after hours on Tuesday likely due to larger shorts scrambling to cover.  The depth of market was heavily weighted to the buy side with sellers willing to show anything being quickly swallowed whole – the longer term overbought readings remain high suggesting some premium will come out at current levels. The proof of SYNA’s ability to support an $85 price tag will not be totally known until the first quarter of 2015, which leaves plenty of room for speculation in both directions as premium expands and contracts.   Look for implied volatility to get cranked up in SYNA.


rambus $RMBS – lifted 2nd quarter guidance to put the icing on the cake to goose prices back towards the $15 level – technically, the indicators don’t agree that it is necessarily in the cards this go around.  In other words it seems the announcement is coming out at a mid-term high and unless the company strongly understated revenue figures the stock is likely to correct back to $9.50 to $10 before reattempting to reach $15.



amazonlogo2 $AMZN – with conviction a Goldman analyst moved (upgraded) AMZN from a ‘buy’ to a ‘conviction buy’ due to its ‘consistently high returns on invested capital’.  What I find interesting is that this is being interpreted as a having been unknown prior to Goldman’s conviction that it is for real.  It has brought a great deal of renewed interest in owning AMZN as the johnnies came storming in an effort to not be totally left behind.  Don’t get me wrong I strongly favor AMZN and believe that Jeff Bezos has constructed a finely tuned business model that has served shareholders well.  While the stock will likely produce additional new highs above $408, the expected correction still expected in the broader market is likely to drag AMZN down as well.  When it was all said and done on Wednesday the stock gained less than 1%.  The momentum oscillators didn’t give much notice to Wednesday’s action making lower highs than last Thursday’s $22 surge higher.  Implied volatility remains under 30% and is likely to find plenty of premium sellers if prices push higher or lower.  Check out today’s chart for trades and discussion.


Steer the course don’t compare yourself to everyone else.  You are not they and they are not you.  Remember to trust and believe what makes you unique at that moment in time and in that situation and allow others to choose for themselves as well.  Don’t be swallowed up by the chaos and false emotions swirling around.  Remember it’s just a number.

Three-keysTrading the number remains key to being able to reduce and separate the “noise” from opportunity.  This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them. 


Opportunity continues to knock on our doors.  While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.