Editor's note: Formerly, Dan Fitzpatrick's short trading ideas were available only to subscribers to TheStreet.com's Short Advisor. Now these picks are being offered to RealMoney and TheStreet.com readers.
With the holiday season in our rearview mirror, let's take a look at Amazon.com ( AMZN), the giant Internet retailer. Has Amazon been naughty or nice? It depends on your time frame. The preholiday season run-up was nice, but the postholiday decline is naughty. Let's take a look. On the chart below, notice how the stock had been bouncing off the 50-day moving average during the December advance, but then rolled over to print a lower high than the November peak. Also in December, Amazon's shares finally gapped below the 50-day moving average on the last day of the year. Over the past few days the stock has declined below the December low. That's a lower high and a lower low in my book, which sets up a favorable shorting opportunity. The entry for this short idea is just below Wednesday's low, at around $37.05. Once the short trade is entered, try setting a stop just above the 50-day moving average, at about $39.60. If the stock moves back that high, I wouldn't want to be long. The downside target for the trade is down around $32. But I'll monitor the trade and suggest adjustments as necessary. The 52-week range for Amazon is $25.76 to $45.97, and shares closed at $37.15 Wednesday.
| Amazon (AMZN) -- Daily |
Recapping Previous PicksSeveral previous short ideas that I've highlighted for readers of the Short Advisor remain open, while some others have closed over the past week.
- Endurance Specialty Holdings (ENH) hit the entry level of $36.15 last week. The current stop is at $37.50. The short is working well right now, but the stop should remain where it is; it's already tight enough. The price target is at $33.
- Federated Department Stores (FD): With an entry at $40.30, the adjusted stop on this short trade is at $39.25. That stop almost triggered yesterday, but not quite -- so no changes to the stop level. The price target is at $33.
- Kohl's (KSS): The entry point for this short pick was $67.90, and the current stop continues to be at $71.20. This stock is gradually rolling over, with the 50-day moving average now heading downward. The price target is down at $60.
- Circuit City (CC): This pick was stopped out at $20.61 last week for a 6.5% loss.
- LAM Research (LRCX): This short idea also ran up to its adjusted stop at $52.05 last week for a 3.2% loss, and is now closed.
- Motorola (MOT): Following the company's earnings warning, the stock reached the price target. So this short pick was closed out last Friday at $18.06 for a 22.3% gain.