Along with the very bullish sentiment, Amazon (AMZN) is just the opposite of Apple and quite overbought. As shown below, it is just breaking out its upper Bollinger Band. Its RSI is approaching 80, a cutoff for the overbought level. Then its P/E ratio is unbelievably high at 164. I don't know how this can sustain and continue. If you are itching to buy stocks, don't buy AMZN at this level. If you have enough gut, then shorting AMZN may be quick money to make. While directly shorting AMZN stock is one way, buying put options is much better with low and defined risk. Even better, buying put spread can substantially increase the odds of winning.
Friday, January 25, 2013
If you dare, short Amazon
S&P 500 has gone over 1500 first time in 5 years. The volatility index, VIX, has been historically low at below 13. The overall market is ridiculously overbought but bulls are simply marching forward. They are definitely the winner at the moment but I'm not sure how long they can last. I'm largely sitting on my hands at the sideline, patiently waiting for the right moment to come.
Along with the very bullish sentiment, Amazon (AMZN) is just the opposite of Apple and quite overbought. As shown below, it is just breaking out its upper Bollinger Band. Its RSI is approaching 80, a cutoff for the overbought level. Then its P/E ratio is unbelievably high at 164. I don't know how this can sustain and continue. If you are itching to buy stocks, don't buy AMZN at this level. If you have enough gut, then shorting AMZN may be quick money to make. While directly shorting AMZN stock is one way, buying put options is much better with low and defined risk. Even better, buying put spread can substantially increase the odds of winning.
Along with the very bullish sentiment, Amazon (AMZN) is just the opposite of Apple and quite overbought. As shown below, it is just breaking out its upper Bollinger Band. Its RSI is approaching 80, a cutoff for the overbought level. Then its P/E ratio is unbelievably high at 164. I don't know how this can sustain and continue. If you are itching to buy stocks, don't buy AMZN at this level. If you have enough gut, then shorting AMZN may be quick money to make. While directly shorting AMZN stock is one way, buying put options is much better with low and defined risk. Even better, buying put spread can substantially increase the odds of winning.
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