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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: umbro who wrote (9589)	7/8/1998 7:45:00 PM
From: Wayners	Read Replies (1) \| Respond to of 164684

This is a response to an AMZN short seller in an SI private message. Thought it might help some people here too. I don't know why people insist on shorting stocks on really strong uptrends. There's plenty of shitty stocks that are on long term downtrends that are better short bets. Remember, lets say AMZN goes to zero and you hold the whole way. You doubled your money. Lets say you shorted APM at $7 and it goes to zero. Guess what, you got the same return on that as you would shorting AMZN. Alright, lecture over. What to do with AMZN now after shorting at $103. Today's drop went below the uptrend line. In fact the whole day's trading was below the uptrend line. Whether people want to admit it or not, this caused some good technical damage to AMZN. It slowed momentum a bit which will scare some of the momentum investors into taking profits on the next big rally or challenge of old highs. Now using that same uptrend line, I'd expect profit taking by momentum investors to start when price rechallenges that line. Draw an uptrendline connect daily lows on the "big run". I use a semi-log plot. That trendline is at about $130 for tomorrow and of course its rising everyday. Here's what I think is going to happen. Price will contine to rise until it strikes that line, then momentum players are going to take profits. It isn't going to take long for price to get there. If price keeps going up through it, ballgame's over and I recomend that you take your losses immediately. If it bounces down as I expect, AMZN will retest your $103 entry price or thereabouts--and you can get out then. You could write covered puts and make some money back--but the problem is that locks you into Jul or Aug expiration date and holding AMZN short. You could write the Jul $100's, or $110's and probably get to keep the money. Its risky but its an option. You can try reshorting at the trendline--but use a sell short stop limit order. When it gets to the trendline, this type of order will make sure its reversing direction in the down direction and prevent you from riding a double position up even further. Another option is to just cover and reshort and just take your lumpts tomorrow--That's the best option in my opinion, but don't reshort at somed random number like $120. Find a good resistance point like the trendline I mentioned. You'll see this method listed in all kinds of books on T/A from guys a lot more skilled than me. Good luck.