Word has it that Amazon (AMZN - Get Report) is moving to Queens, NY. Actually, the Long Island City neighborhood is perfect for Amazon. Large swaths of commercial properties, access to major highways and railroad hubs, proximity to both Long Island and New York City. If so, well done. The New York Times is reporting that Amazon has likely selected both this area and the Crystal City area of Arlington, Virginia as either secondary headquarters or super-sized satellites offices on the East Coast to add to the Seattle-based firm's presence. These additions are expected to add 50,000 hires between the two sites, and these are expected to be good jobs. In addition, the area is within striking distance of more than 20 million area residents -- or to put it in perspective, 1 of every 16 Americans.
I receive requests for comment on Amazon from retail investors nearly every day. The name has been extremely volatile, so let's take another look, from a fundamental/technical hybrid type of view, and see if we can offer our dear friends anything of value.
The first thing I see is the resistance that Amazon recently met at a 38.2% retracement of the earnings-related selloff. You may see this as the 200-day Simple Moving Average, as they are nearly one and the same. Relative Strength and the Money Flow have improved noticeably, while the daily Moving Average Convergence Divergence is currently set up for short-term bullishness.
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The stock will likely retest the $1690 level from below at some point this morning. Anything resembling a take-and-hold at that spot could allow the name to appreciate another $60, as markets normalize over a couple of weeks. The danger here is that the Fed is likely willing to harm all equities on Thursday afternoon, after feeling emboldened by the incredibly robust October employment situation.
Do not forget that Amazon remains top dog in the public cloud space, even if Microsoft (MSFT - Get Report) closes in as a real competitor. In my opinion, there is ample room for both. Let's also remember the firm's dominant position in e-commerce and the growing advertising business that this supports. The eventual direction of that advertising business line could end up being as important as the underlying commerce itself.
It's not my quote -- perhaps it was The Street's Zev Fima who said (paraphrasing) that if someone is already on Amazon, that person is already looking to spend money. The danger? That the firm shows no concern whatsoever when it comes to investing in growing its businesses -- and that could impact margins in a painful way now that the firm is profitable.
Enough. I certainly believe in this stock as a medium-to-long-term investment. As regular readers know, I maintain a core long position in this name that I consider somewhat untouchable, and often trade short-term volatility in the name separately, as if the these were two positions.
FYI, though these sales can be quite lucrative, I have, for now, suspended my sales of out-of-the-money puts in any name that trades at a four-digit handle. I really had to sweat out the October monthly expiration period, and while I did get away with that, it was absolutely no fun at all.
Key Levels on Amazon
Target Price: $2100 (reiteration)
Panic Point: $1350 (down significantly)
Note: These targets are meant for core long-term positions. I have been much more aggressive in regards to my short-term book and recently benefited greatly from the stock's adherence to the Fibonacci model. That said, I intend to give $1690 a chance to fall rather than take an automatic profit there.
(A longer version of this column appeared at 7:37 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts throughout the market day.)