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 |