Of the Nasdaq ‘lunatic stocks’ tracked by Rick’s Picks, AMZN was the only one able to buck the bearish tide on Friday, gaining $3 on the day. Under the circumstances, we might expect the retail giant to lead the market higher on the next charge, assuming there is one. Stocks appear stalled just beneath some very important Hidden Pivot rally targets I’d flagged a while back. Assuming there is at least one more leg up, however, that would be reason to infer AMZN will reach the 447.80 midpoint pivot shown. Moreover, an easy move past it would portend more upside to as high as 464.42 (p2) or even 481.04.
The company is about to branch into its own line of foods, and there is no reason to think they won’t succeed despite the extreme competitiveness of the business. To leverage the bullish case we can try to leg into cost-free vertical spreads at the 450 strike with a July 18 expiration. The $5 spread (450/455) is currently 0.95 bid, but our goal will be to own it for nothing by buying 450 calls on weakness, then shorting 455s on strength. Stay tuned to the chat room for guidance, since this will take some work.