Amazon (AMZN): The Most Important Question You Should Be Asking
One technical tool helped minimize the risk of AMZN’s February 8-9 selloff
by Nico Isaac
Updated: February 16, 2018
When I started writing about financial markets many years ago, I was an English major with zero knowledge of finance or technical analysis. Heck, I thought a bull market was where male cows hung out. I also thought, how on earth am I going to make this stuff sound interesting? It isn't Shakespeare, after all!
But what I quickly learned is that markets don't trade themselves. People trade markets. And traders are just as fascinating as the characters in the novels I read in all those literatures classes. They both have the components of a great drama:
- High stakes
- A fast, fleeting opportunity
- A desire to seize said opportunity before it's too late
And, most of all, in literature and investing, emotion can be the main character's greatest downfall. Here, our chief market analyst and Trader's Classroom instructor Jeffrey Kennedy separates the objective trader from the impulsive one by the very question that drives their decision to enter a specific market:
The impulsive trader asks him/herself, "How much money will I make if I'm right?"
The objective trader asks him/herself, "How much money can I lose if I'm wrong?"
The first question leads to a leap-first, ask-questions-later approach which often ends in disaster.
And the second one leads to what Jeffrey calls a "high-confidence trade setup." They contain four critical elements carefully curated by Jeffrey himself, and most importantly, they contain ONE powerful tool for knowing whether the setup is wrong, a "telltale sign of trouble" that enables you to get out of a trade before it's too late. This tool is the critical support/resistance level, as defined below:
- Support levels are below the current price action (which signifies a bullish stance) -- so if prices drop below these levels, you know your bullish stance is not working out.
- Resistance levels are above price action; they are "lines in the sand" whenever you have a bearish stance. If prices rally above these levels, again -- that's your "risk."
As for how these levels minimize risk in real-time, let's go to the February 7 Trader's Classroom lesson. There, Jeffrey presented a near-term bullish set-up on the 15-minute price chart of Amazon (AMZN). However, any rally potential depended on prices obeying the critical support level identified by Jeffrey at "1401.10, where this assessment unravels."
Go ahead and watch a clip from the February 7 Trader's Classroom, where Jeffrey walks traders through the complete details of his AMZN analysis. Simply press play and enjoy!
So, what happened next?
The next day, AMZN turned down and triggered Jeffery's cited support, clearing the way for the dramatic sell-off into the February 9 low, pictured below:
It's like a great Shakespearean drama, only without the body count!
And the best part is, we have an equally exciting sequel to the Amazon story. In the February 13 Trader's Classroom, Jeffrey revisits the price chart of AMZN to answer one main question: Is the peak we saw in February the end of this hot stock's rally?
Jeffrey then provides the answer with the objective, risk-minimizing criteria his subscribers have come to expect from Trader's Classroom service.
THAT trader who can see high-confidence entries, get in and get out with
confidence — and sleep at night.
Several times a week, you meet with a market veteran and he's one of the
most sought-after teachers in the world. He has dedicated his entire
professional career to helping traders like you spot and act on
high-confidence trade setups.
At every meeting, you watch over his shoulder as he shows you exactly
how to spot your market opportunity. And he doesn't just teach principles.
He uses real-life market opportunities to show you the
telltale signs that a market is about to move. He also coaches you on how
to create your trading plan for this setup — including how to estimate
upside potential and identify risk-limiting price levels.
Sound like an ideal fantasy? Well...
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