AMZN after earnings trade
Posted by Darcy
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AMZN after earnings trade February 23, 2012 11:03AM |
I have to admit this is a very hard market to trade right now. However I generally trade better in warnings season than I do in earnings season. That is how I have been using RTT and why, at least one reason why, I liked AMZN after they announced earnings. I am a bit bearish and for me AMZN backed up that thought.
I bought 3 March PUT contracts of AMZN yesterday at 10:08 AM. I paid $7.75 and all day long I expected the stock to fall. I held over night believing the stock would fall with perhaps a second dead cat bounce (see investopedia.com for that trade). I sold first thing this morning when the stock gapped down with a profit of $510.12.
Here's how I made my decision to trade AMZN:
I used a 34 chart for my decision, the 50 and 200 moving average as resistance on the 34 chart and pulled the trigger off the 5 chart. I was a little nervous holding over night because of this difficult market but I was still able to sleep.
When I play a Dead Cat Bounce I always mark the gap. I mark the Daily chart and my decision chart. I make three dash lines; one for the close of the day before, one for the open of that day of the gap and one for the CENTER of the gap. I use the center as my mark for trading up, down or getting out. I will only trade down when a stock uses that center line for resistance or trade up when that center line holds the stock as support and only use these signals on the DAILY chart not my decision chart. These trades take one full trading day to set up but several days before they are ready to trade. Look at AMZN daily chart to see what I mean. I do not like to try and catch a "falling knife". Blood scares me!
AMZN has a double gap and when this happens I draw lines for the second gap and leave the first gap lines. The more the stock does not break above these gap lines the stronger the resistance is and thus more reason for the stock to go down as with AMZN. The more a stock does does break the gap going up the stronger the support is for the stock to go up. The stronger the resistance or support the heavier I mark my gap lines. I only change the dash line to a heavier and darker solid line after the gap line has been tested more than once.
I mark the gaps on my decision chart. I do not enter a PUT or a CALL on a gap when the candle is out of the Bollinger band. I always wait for it to test the decision chart and retest the strength of the gap. If I am over sold or over bought (StochRSI) I have all the more reasons me to wait. I watch my MACD “comb” lines. I want them going in the direction of my trade and just starting out on the second "tooth" of the comb before I even consider entering the trade.
I could have made more with AMZN had I remained in the trade but then again... I really like Seattle right now.
Edited 4 time(s). Last edit at 02/23/2012 11:17AM by Darcy.
I bought 3 March PUT contracts of AMZN yesterday at 10:08 AM. I paid $7.75 and all day long I expected the stock to fall. I held over night believing the stock would fall with perhaps a second dead cat bounce (see investopedia.com for that trade). I sold first thing this morning when the stock gapped down with a profit of $510.12.
Here's how I made my decision to trade AMZN:
I used a 34 chart for my decision, the 50 and 200 moving average as resistance on the 34 chart and pulled the trigger off the 5 chart. I was a little nervous holding over night because of this difficult market but I was still able to sleep.
When I play a Dead Cat Bounce I always mark the gap. I mark the Daily chart and my decision chart. I make three dash lines; one for the close of the day before, one for the open of that day of the gap and one for the CENTER of the gap. I use the center as my mark for trading up, down or getting out. I will only trade down when a stock uses that center line for resistance or trade up when that center line holds the stock as support and only use these signals on the DAILY chart not my decision chart. These trades take one full trading day to set up but several days before they are ready to trade. Look at AMZN daily chart to see what I mean. I do not like to try and catch a "falling knife". Blood scares me!
AMZN has a double gap and when this happens I draw lines for the second gap and leave the first gap lines. The more the stock does not break above these gap lines the stronger the resistance is and thus more reason for the stock to go down as with AMZN. The more a stock does does break the gap going up the stronger the support is for the stock to go up. The stronger the resistance or support the heavier I mark my gap lines. I only change the dash line to a heavier and darker solid line after the gap line has been tested more than once.
I mark the gaps on my decision chart. I do not enter a PUT or a CALL on a gap when the candle is out of the Bollinger band. I always wait for it to test the decision chart and retest the strength of the gap. If I am over sold or over bought (StochRSI) I have all the more reasons me to wait. I watch my MACD “comb” lines. I want them going in the direction of my trade and just starting out on the second "tooth" of the comb before I even consider entering the trade.
I could have made more with AMZN had I remained in the trade but then again... I really like Seattle right now.
Edited 4 time(s). Last edit at 02/23/2012 11:17AM by Darcy.
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Re: AMZN after earnings trade February 24, 2012 12:54AM |
Wow, great post Darcy - thanks for all the detail.
Congrats on landing safely in Seattle!
Congrats on landing safely in Seattle!
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Re: AMZN after earnings trade February 24, 2012 09:34AM |
funkho did it in this thread:
[www.researchtrade.com]
I don't know how he did it, though. I beleive he is still around, but hasn't posted in a while on the forum. Hopefully, he will see this and chime in.
[www.researchtrade.com]
I don't know how he did it, though. I beleive he is still around, but hasn't posted in a while on the forum. Hopefully, he will see this and chime in.
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