I had planned to share a completely positive note on Amazon (NASDAQ:AMZN) stock today. Therefore, it breaks my heart to be a little careful instead.
No, I haven’t lost my love for AMZN stock. It’s always the best of the best in my book. This latest escape delivered too too quickly. there will be better investment weaker opportunities, but with a twist. Later, I’ll share some really exciting breakout potential to follow through to Friday.
From there take new ones investment positions on Amazon is risky. This is not an obvious point of entry with confidence. This is my everyone’s favorite stock, so these comments are not bearish warnings.
Most investors can pick the right stocks. Where they most often fail is with the “when” part of the equation. The timing is tricky, especially for a stock that is moving so quickly.
AMZN climbed nearly 5% on Tuesday. Shopify (NYSE:SHOP) and Apple (NASDAQ:AAPL) also rallied among many others. the Microsoft (NASDAQ:MSFT) The Pentagon title acted as a catalyst, but that is irrelevant long term.
The offering under AMZN and the rest of the FANG gang is just part of the spinning trade. Investors traded their love between small caps and Nasdaq During months.
Investors will have better opportunities for AMZN shares
The best entry points from here would be after a correction from its previous support levels. There are several between $ 3,400 and $ 3,200 per share. There was no need to rush to chase after the hike yesterday morning. Patience is usually the right course of action. I am convinced that investors will have the ability to deploy long-term risk from better perspectives.
Also, earlier I teased a bit of a bullish opportunity. It would be for active traders who don’t mind scalping gains and trading price action. It would be a mixture of slow but violent escape. To see this we need to zoom out on a weekly chart (pictured). If the Bulls can close on a new weekly high, they can rally another 700 points from there.
You read that right, the breakout could be something fantastic. Nvidia (NASDAQ:NVDA) just did something close, so it’s doable.
The opportunity comes from a long period of consolidation that is happening now. AMZN’s stock has recovered quickly and furiously out of the pandemic. Then it stalled in the current one-year consolidation stint. He played ping pong inside a very wide side channel. If they can exceed the upper limits, the bulls will exceed significantly. The bears won’t stand a chance because they would be in the open air.
This, however, would not be considered a long-term full-size entry into Amazon’s inventory. Those who catch it have to reap profits quickly because I don’t think it would last long. Investors who buy and hold are likely to fall into a trap for some time.
Record markets are dangerous
The stock markets are breaking all-time highs. Yesterday the S&P 500 barely closed the red, thus stopping the race at nine consecutive new all-time highs. It was a day far from another record breaking record.
But a red check mark is not a hollow. The indices have gone far too far without significant correction. That alone is not a reason to sell, but it is a reason to doubt the bullish thesis including Amazon stocks.
To be patient now is difficult, but it is the right course of action. Active traders understand this concept of timing. Those who are purist investors may have a problem with me suggesting to wait. But if indeed a few dollars of difference does not matter, then there is no loss to be expected. I would rather miss another 5% rise than buy a high.
They don’t ring like bells at the top, but the index charts seem parabolic beyond anything we’ve ever had before. That alone should raise questions as this is literally uncharted territory. Therefore, my belief in all of my trades is intentionally lower than normal by design. I believe that extra caution will keep me safer than the average bear – pun intended.
At the date of publication, Nicolas Chahine did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
Nicolas Chahine is the Managing Director of SellSpreads.com.