<When most of the people think or believe a stock can do or go in only one direction it will invariably go the other way.Down is up and up is down.The crowd is always wrong.The trick is to go against the popular wisdom and you will profit greatly.>
Perhaps. But that holds true during a panic. Nets have sold off substantially but we are nowhere near a panic yet. Pre-split AMZN is still trading at 318. Were it to drop to 150 pre-split or 50 currently, it would still be trading at a level FIVE TIMES THAT AT WHICH IT TRADED IN OCTOBER.
A great many people have lost fortunes trying to short AMZN. Their mistake was borne of impatience and a stubborn refusal to believe the tape. AMZN is a terrific short right now. It has retraced 50%, but then that 199 was a joke and everyone knows it. AMZN is trading right now at about where it did when the split took place. The 100% run-up was its death-knell. Now it is headed lower. Although Internets have retraced a bit, the markets have yet to give back some extraordinary gains. Yesterday afternoon, when the Nasdaq gave back 60 points of its gain in the afternoon, and today, when it lost another 70, signals a major reversal in the markets. A Brazilian crisis is looming, and it has already spread, as we saw today with the dramatic 7% downturn in the Argentinian market. Many publications are signaling the death of Internetmania. Those articles will put the fear of God in investors this week-end, who wake up Saturday morning to some free time in which to let this week's dramatic losses sink in. They will bail en masse Monday. I see a further slide in the Nasdaq tomorrow with a possible crash on Monday of 120 to 150 points. At that point AMZN should be trading at about 50, if not less. Then Tuesday afternoon earnings will be coming out. The company has already prewarned and delayed release of its earnings - both very bad signs. After earnings expect this stock to plummet.
I am already short this stock and plan to build up a massive position going into the week-end. AMZN has not traded on fundamentals for a long time. It's run-up has been based solely on a mad frenzy to buy all things Internet, huge momentum due to excessive optimism, and several huge short-covering rallies. That is all over now. The momentum has turned abrubtly and reality is slowly setting in. Investors will realize their substantial losses and the incredible reversal and, just as quickly as AMZN went up, it will crash back down as investors flee. Institutional ownership will make no difference. As a matter of fact, those institutions missed the Internet train and are dying to crash the sector so they can pick up these companies at fire-sale prices. They will do all they can to accelerate Internet deterioration. See everyone at 50 within two weeks, and perhaps 30 in four. Good luck to all of you in this stock. |
