The Amazon. When I was a kid, I always dreamed and imagined going to the Amazon, wrestling with anacondas, fishing and meeting all the natives, swinging through the trees on vines like Tarzan.

My school bus driver called me Tarzan, because of the rope swing that was in my front yard. My uncle Ricky climbed a very tall tree that was on the top of a hill and tied a rope to a strong branch. The tree was every bit of 60 feet tall and my house was on top of a steep hill. The rope swing, in combination with the hill and the height of the tree, had an apex of approximately 30 feet. I would swing out as the bus drove by, hanging by one hand, doing tricks; it was glorious.

I say all this to say, the names of stocks and companies often bring back fond memories of my childhood, one that at some point will be captured in a detailed book with pictures, as it is not congruent with the 21st century.

STOCK WATCH

Amazon (AMZN) could be a stock to keep an eye on right now. It is displaying what I refer to as “amazing wave rotation.” AMZN was in a massive distribution phase from really January, 2013 to July of 2013.

When AMZN had a bullish break of that strong resistance around $283, it soared (and quickly I might add) to an all time high, it’s next resistance, of $311. This is where the wave rotation comes in; AMZN then retraced and tested old resistance as new support and bounced very nicely and cleanly off of the $283 price.

This stock is currently trading at all an all-time high. AMZN is above the exponential moving averages, it’s also above the long term moving averages. The price action once again pierced the top of the Bollinger band and now, at an all-time high, AMZN appears to be forming a continuation pattern. One could call it a flag or stair step pattern but volume is declining for sure.

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HOLIDAY SHOPPING

Taking into account the seasonality of this stock, being that Christmas is right around the corner and Amazon, being the world’s largest online retailer, the company will likely be receiving a lot of business in the next few months. After all, Christmas is focused almost solely on commercialism, right? But, that is a topic for an entirely separate article.

BULLISH OUTLOOK

Bottom line, the stock looks bullish. If you are a trader who is familiar with spreads, you could initiate a $290/$285 bull put spread for about 20% ROI. AMZN does have earnings in October but it would be after the third Friday (option expiration). A minimum of 10 shares would be a nice investment on a more expensive stock like AMZN but a trader could still do covered call sales on AMZN because of the new mini options, which control 10 shares of a stock. A stop would simply be placed below current support.

KEY LEVELS

My next two targets on AMZN, if it breaks this continuation pattern bullish above $318.27 and $321.29, with some closes above there, targets would be $330.64 then $342.72 based on a Fibonacci extension.

This could be a wild and fun trade, like swinging on vines through the Amazon!

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Another trader has a bearish view on AMZN read that story here. Let us know which side you agree with below!