2024-07-01 13:53:14

How to Trade Amazon Stock Now: Expert Insights and Strategies

Investing in stocks can be a thrilling experience, especially when it comes to giants like Amazon (AMZN). However, market movements can occasionally unsettle even the most seasoned investors. Recent fluctuations in Amazon’s stock price have raised eyebrows and prompted discussions among traders about the best strategies moving forward. This article delves into expert trading strategies for Amazon, using insights derived from a seasoned trader known affectionately as Red Dog, who shared his thoughts and strategies in a recent discussion.

Understanding Market Signals: Insights from Red Dog’s Trading Strategies

The Importance of Candlestick Analysis

In stock trading, candlestick patterns are crucial for understanding market sentiment and potential price movements. Red Dog emphasizes the importance of paying attention to specific patterns to gauge entry and exit points in Amazon stock trading. For instance, a significant candle that appeared on a recent Friday was alarming to some, but Red Dog suggested it signaled an awakening rather than a downturn. He described how this particular candle reached a low of 185, which was actually an opportune moment to consider entering the market if one follows a tiered trading system.

Implementing a Tier System in Trading

Red Dog advocates for a tier system in trading, where adjustments are made based on market behavior and individual trading positions. After the awakening candle, there followed another candle which he termed an "add-on candle," essential for traders who were already positioned and looking to increase their stake.

The subsequent candle brought concerns as it appeared to be a signal for a reversal, commonly referred to as a "Red Dog Reversal." Despite this, Red Dog advised not to panic, viewing the situation as a normal market correction rather than a dire reversal.

Strategic Position Adjustments

Through the tier system, Red Dog made strategic sells when Amazon’s stock hit certain thresholds. Selling his positions in the 192.5 and 195 calls when the market peaked above these figures, and even offloading shares when they climbed above 199, allowed him to capitalize on the upward trends without too much exposure should a reversal occur.

Navigating Volatility and Market Corrections

The Role of Moving Averages

Moving averages are essential tools traders use to determine the general direction of a stock’s movement and identify potential support and resistance levels. Red Dog pointed to the importance of the eight-day moving average, noting that Amazon’s stock was extended beyond this point. This observation suggested that a correction or consolidation might be imminent as the stock realigned with its average trading range.

Adjusting Options in Extended Markets

On days when Amazon’s stock seemed unusually high – or "extended" – Red Dog took protective measures by rolling up his options. This involved moving from lower strike prices like the 192.5 and 195, up to the 200 level for forthcoming trading sessions, safeguarding his investment against potential downturns while still positioning for further gains.

What Does Future Hold for Amazon Stock?

Analyzing recent trends and strategic moves by traders like Red Dog can provide valuable insights into future market behavior. For instance, the news of Amazon’s significant investment in its AWS infrastructure is likely to impact stock prices positively, as it reflects growth and expansion plans which are typically well-received by the market.

Predicting Short-term Movements

Given the current data and market activities, traders might expect Amazon to experience sideways movement short-term as it digests the recent rapid gains. This consolidation phase could be critical for determining the stock’s next big move.

Conclusion: Key Takeaways for Trading Amazon Stock

Trading Amazon stock efficiently requires keen observation of market signals, a disciplined application of trading systems like the tier system, and a strategic adjustment of positions in response to market changes. Following expert strategies and remaining adaptable to the dynamic market can help traders not only survive but thrive in the fluctuating landscape of stock trading.

Though this article provides a synthesis of expert trading commentary, traders should always conduct their own research and consider multiple perspectives before making trading decisions. Happy trading!

Watch this video below for the full details:

2024-07-01 13:53:14
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Video transcript:
some people like hey Red Dog we made so much money in Amazon but that candle on Friday scares the kaj Jesus out of me listen I I understand but again this shouldn’t be so scary yet this is when Amazon Woke Up This was 185 so if you use a tier system you had this candle to put on those 192 and A2 calls for last week then you had this candle which woke it up this was your add-on candle this was your tier one but then I remember this candle every was like red dog it’s a red dog reversal sell it’s over I’m like just from from where we came from to hear this this isn’t the end of the world all it is coming to the E day so now you’re on a little bit more weight and C mode then you had an inside day in pow so although this candle wasn’t so pretty I know for me which I did tweet to you guys if I was in tier two here tier three here I was selling my 192 and a halfs and 195s above 192 and a half 195 and I even think I tweeted when it was above 199 I’m like I’m down to 25% of what I had on because I was booking money I used a tier system so and then even on Friday Friday Amazon went green for a good 5 minutes so if you like hm Amazon’s a little extended I want to roll up my options which is what I did I took off the 192 and a halfs and the 195s and I rolled them into the 200s for this Friday and next Friday this didn’t really mean much look where the eight day is we were just that extended so now what this is the low 19250 from Friday and uh we’ll see what happens today does does Amazon go sideways and and digest this candle it’s already up a buck 40 this morning there’s actually some news out there that they going to invest like 10 billion into their AWS infrastructure which is what the street wants to see bottom lines are up a buck 43 I was buying Amazon into that I I kind of thought that this was mechanical so I did position a little bit into the close at the end of the quarter