Thursday, June 23, 2016

#AMZN Bias & Levels Update for Thursday June 23, 2016 by @mocktrade

#AMZN Bias & Levels Update for Thursday June 23, 2016 by @mocktradeSocialTwist Tell-a-Friend

I do not currently have a position nor a Strangle in AMZN ahead of the Brexit vote but I am seeing AMZN as a definite stock which should be hedged just in case the overall US stock market’s reaction is bearish for equities following the Brexit vote regardless of stay or not.

What I am taking note to is while AMZN has been the strongest of the FANG stocks (especially compared to NFLX & GOOGL) AMZN has now also failed to breakout to new highs for more than 6 straight weeks along with volume decreasing dramatically over the past 6 weeks as well except during the one day AMZN sold off a bit this past Friday.

Decreasing volume at/near ATHs is usually not a good sign for further upside with legs (or at least is a sign for limited upside) no matter how solid a stocks fundamentals are, which is also usually a sign odds are more in favor for a meaningful pull-back before resuming higher.

If not for the potential of a positive market outcome following the Brexit vote my mindset would definitely be thinking AMZN should be heading to 685s-682s zone before making another attempt at new ATHs; however if equities rally post the Brexit vote a AMZN bearish scenario will likely be negated and new ATHs will also be very likely, but with AMZN struggling to make new highs for so long (6+ weeks) on decreasing volume I would be hedging my AMZN exposure via short-term Puts if I was currently in a Long position.

If an AMZN bearish scenario does follow the Brexit vote and if also breaching below 682s the hedge via Puts would protect the potential for/if AMZN started to head to the next lower target at 665s-660s zone. If below 660s the line in sand (LIS) for buyers would be 649s-647s zone otherwise odds will favor a move to 630s/29s and possibly lower. 

Ethan Premock Futures & Options Strategist at Hamzei Analytics, LLC 

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