While Amazon.com (NASDAQ 🙂 posted impressive results last Thursday, its stock plummeted nearly 5.5% on Friday. The reason? His advice, which noted that the size and volume of online shopping may have grown during the pandemic, but CNBC said it had "spent a broad profit margin … for the fourth quarter because of the higher costs of the coronavirus pandemic."
Nonetheless, the Seattle e-tail case set some records. It showed a 37.4% revenue increase to a record $ 96.15 billion and a 196.7% increase in net income to a record $ 6.33 billion.
And the company's revenues also showed impressive growth:
37% increase in net sales in the third quarter to $ 96.1 billion
33% increase in net product sales
43% jumped in net services
29% in sales jumped to $ 11.6 billion for its cloud computing division, AWS, accounting for $ 3.5 billion in operating revenue – or more than 50% of the world's largest retailer & # 39; s total operating income of $ 6.2 billion.
However, guidelines were the trigger that led to Friday's steep sell-off: 28% – 38% net sales growth, which was positive, but $ 1 billion to $ 4.5 billion in operating revenue, driven by the market. read as negative as this translates into a profit slowdown in the range of + 15% to -74% year on year.
Given that investors are buying stock before their future appearance and the company expects its value to slow or even fall, traders sold the stock sharply on Friday. That sell-off completed a small bearish pattern, whose implied target suggests another, larger bearish pattern is in the works.
AMZN Daily
Friday's decline completed a month-long H&S summit, itself the right shoulder of a larger H&S reversal pattern, which was four months in the making. If the smaller H&S updates its implied target of more than $ 350 dollars lower, based on the height of the pattern (the idea is that positional mechanics – the unwinding of longs and reinforced shorts – would drive up the price for at least the same size that they are in. the pattern created), it will also have completed the larger top, whose neckline is $ 2,888 (red line).
Trading Strategies
Conservative traders would wait for the larger pattern to complete with downward penetration of less than $ 2,800; then wait again for a return motion to retest the resistance of the (red) neckline before entering a short position.
Moderate traders would wait for a move back to limit exposure with an entrance closer to resistance to both patterns.
Aggressive traders could now go short after writing a trading plan that takes risk into account and sets their target with a risk / reward ratio that allows them to stay on the side of the statistics in their overall trading. Here's an example:
Trade Sample
Entries: $ 3,036
Stop Loss: $ 3,136
Risk: 100 points
Target: $ 2,336
Reward: 700 points
Risk: Reward Ratio: 1: 7
Author's Note: This is not the only way to approach this trade. It's just one example. You need to create a plan that fits your needs, including your budget, timing, and temperament. For example, you can trade the range between the two necklines for a smaller trade bet. Good trade!
