I am a huge fan of Amazon (AMZN), and in fact it’s a rare day when a package from them does not land on my doorstep. The company is an enviable position, dominating e-commerce and demonstrating passion for excellent customer service.
They have been around for nearly 20 years, and they have been a public company for most of that time. Amazon has survived the dot.com bubble, the subsequent bear market that destroyed many Internet brands, the global financial crisis, and heavy competition from Alibaba, Walmart, Google, and Ebay.
It’s quite a testament to their business model that they are still standing tall in their segment. Yet, as investors, we have come to scorn the management team for their gimmicky, quick-to-fail products like the Fire phone.
Further, the desire to actually make money seems lost on management. During every quarterly earnings report, investors wonder how big the loss will be this time. The excuse? “We are investing in the company.” That’s understandable, but at some point, Amazon needs to deliver bottom-line results.
During the fourth quarter, Amazon turned heads as they posted robust sales and strong earnings growth. Investors responded in kind, pushing the stock up more than 15% to levels not seen since last summer. This move was a game changer for the stock, automatically putting it in the buy category.
However, since the stock went up more than $50 bucks in one day (on Friday, January 30), how could we possibly get in on the action?
Very simply: The momentum turned positive, and February 2 was our confirmation day, when both the daily and weekly charts actually had the same patterns (you’ll see this in the video below).
The most recent example of a stock behaving in the same is Netflix, which closed at $62 post-earnings, then rose another 60 points over the next few trading sessions.
Perhaps Amazon got the message in October 2014 when investors pummeled the stock after a big earnings miss. Hopefully this will set a new trend and investors will start warming up to the big online retailer.
Because the charts looked so good, we added a trade in the Explosive Options service and talked it up in the Chat Room last week, giving everyone who subscribes the opportunity to get in on the action. One of the newest chat members got on board and told us about it over Twitter:
@aztecs99 just wanted to say thanks for a great day in ur chat room with ur AMZN call
— lbtrader (@andmah) February 2, 2015
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