September 24, 2011
AMZN Weekly Options Trade Analysis
Amazon.com, Inc. operates as an online retailer in North America and internationally. It operates retail Web sites, including amazon.com and amazon.ca. The company serves consumers through its retail Web sites and focuses on selection, price, and convenience. It also offers programs that enable sellers to sell their products on its Web sites, and their own branded Web sites. In addition,
the company serves developer customers through Amazon Web Services, which provides access to technology infrastructure that developers can use to enable virtually various type of business. Further, it manufactures and sells the Kindle e-reader.
Trade Recommendations—if you are trading weekly options on AMZN, focus your attention on bearish weekly option strategies. We believe that our bullish days are numbered and it looks like the bears are going to have the upper hand for a while.
Bollinger Bands—after moving up so high, AMZN appears to have dipped back down to the middle band. If it follows the same pattern it has been following, then it is still going to move lower. AMZN has been bouncing wildly back and forth getting higher and lower. If we follow the same pattern, we still have a ways to go before we turn bullish again.
RSI—while AMZN has been moving up, we can discover a slight negative divergence in higher highs. This is telling us that we may be coming to the end of this wacky pattern. The higher highs do not have as much strength and we may have seen the last of this pattern. Important observation.
MACD—AMZN looks like it is still ready to move down farther and is not giving us any indication that it will bounce off the middle band where it rests. The MACD Histogram could make a mild point for a low but we do not have any indication really that it is ready to stop. We expect still a move down.
Chart—while AMZN has been moving up, we are getting indications that this continuous widening is about to end. And if the indicators are correct it will lean toward the bearish side right now and our bullish moves have come to an end—at least in the short term.
