As I’ve said, I am currently leaning towards a down market and I have been looking for weaker stocks in the Mag 7 to ride down with puts. I just used TSLA which I thought was weaker than the market as a whole a couple days ago, and I had a nice profit on a day trade. Of all the stocks in the Mag 7, TSLA had the weakest performance over the last two days and I could continue to use it, but I am now looking at AMZN which is interesting for other reasons.
As I explained here:
Of the Mag 7 stocks, AMZN went down by around 3% in the recent downdraft that started 10/12. Three others went down more including TSLA which I traded down with a put, but also NVDA and META but those two were relatively strong in the last month so the last couple of days might have just been an overbought reaction without much follow through. Now, since I made that post, I looked at all of the Mag 7 + SPY over the last month (9/14 - today) and this is the ranking of gains (or losses):
So, AMZN was one of the biggest losers over the last couple of days and they were also the biggest loser over the last month, losing more than double the loss from the rest of the market (S&P 500). Now, AMZN had a super earnings report in early August gapping up by more than 9%, but by the end of September they had traded down well past the bottom of this gap basically making their stellar report meaningless to their stock price. This is a bad sign.
Since their recent bottom on 9/28, AMZN has been trending basically upward until the 10/12 top. But I really did not like the action all the way up which I thought was volatile. As I have said many times recently in many different threads on Fool, I look at volatility as bearish even if it is volatile in an upward direction. The following is an AMZN 30-min showing all the air in the chart:
As I explained in this post, I view lots of gaps as an extreme version of volatility:
In that post I correctly predicted the down move on SPY. But if you look at the chart in that post and compare it to the chart I just posted you can see that there are many similarities. In both cases, there was an uptrend over days with many gaps culminating in a strong up move (strong up can be a bad sign of volatility) followed by a strong down move.
When I look for an intraday entry, I typically go by the 5-min chart. The following is the chart I would use: