With Amazon shares getting slammed in after-hours trading, it’s hard to be bearish on the stock market. Let me explain. The canny, institutional dirtballs who manipulate this stock for a living have never been known to pass up an opportunity to shake it down in order to buy lots more of it at fire-sale prices. That’s what they are doing at the moment, seizing on a 27-cent earnings miss to put up some lowball bids. The stock has traded down to 745 this evening after ending the regular session at 815. The talking heads on the biztainment shows are telling us that at the higher price, AMZN shares were priced for perfection. It would be more accurate to say that AMZN was priced for distribution. Let’s give the aforementioned institutional dirtballs their due. For in fact, the shares of one of the smartest, most successful companies in the world do not drop by 9% in the blink of an eye unless there are size buyers eager to grab as much stock as they can at distress prices. Thus are widows and pensioners tricked into dumping the bluest of blue-chip stocks into the hands of such as T. Rowe Price, Vanguard, State Street and BlackRock.
The news media, usually out of ignorance, has been complicitous in this earnings con-game as it has repeated itself over and over again. That’s why we read articles like the one about how Facebook offers investors much better value because the company brings more revenue down to the bottom line. Amazon, as we know, prefers to plow most of its profits back into its operations. It is constantly growing, including in the brick-and-mortar way that investors have come to shun even as they pay exorbitant valuations for hot-air balloons like UBER, Twitter, Airbnb and Xiaomi.
Is Bezos Worried? Probably Not…
You can bet that Jeff Bezos, whose 81 million shares make him by far AMZN’s biggest investor, is not wallowing in his cups tonight. Until this afternoon, Bezos has been creeping up on Warren Buffett as the world’s richest man; however, for a patient sort such as he, that distinction can wait. A press release focused on Amazon’s runaway hit, Alexa, the artificial intelligence machine behind the Echo and a growing number of Amazon products. “It may be Amazon’s most loved invention yet,” Bezos said.
For our part, we continue to regard AMZN as the most important and reliable bellwether for the stock market as a whole. As such, nothing could be more bullish than the spectacle of AMZN’s handlers pulling their bids on an earnings miss. From a technical standpoint, we’d be a buyer on a pullback to the red line, a ‘midpoint Hidden Pivot’ at 679.60, with a stop-loss at 611.07. If you are interested in ways to cut the implied entry risk of $6853 per round lot by a theoretical 95% or more, stay tuned to the Rick’s Picks chat room, since conversations in the room often focus on such tasks. Since there’s always the chance the foregoing analysis has gotten it wrong, and that AMZN has seen its bull market top, we’ll continue to monitor the stock’s vital signs very closely in the weeks and months ahead. The first sign of trouble would come in the form of minor abcd downtrends that exceed their d’ targets. For now, though, our bias will be increasingly bullish as the stock falls toward the red line. Click here for a no-risk trial subscription that will give you instant access to a 24/7 chat room that draws savvy traders from around the world.
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