On CNBC's Options Action, Carter Worth shared his analysis of Amazon.com, Inc. (NASDAQ: AMZN). He used technical analysis to explain reasons behind his bearish outlook for the retailer.
Worth said that the stock significantly underperformed peers in the last two months. While American Eagle Outfitters (NYSE: AEO) and Family Dollar Stores, Inc. (NYSE: FDO) gained 38.5 and 28 percent, respectively, Amazon.com, Inc. fell 0.6 percent. Lands' End, Inc. (NASDAQ: LE) also did much better than Amazon.com, Inc., with an increase in price of 23.1 percent and Kohl's Corporation (NYSE: KSS) managed to gain 19.5 percent. Ross Stores, Inc. (NASDAQ: ROST) jumped 17.9 percent and Foot Locker, Inc. (NYSE: FL) added 15.8 percent. The weakness in 2014 is a concern for Carter Worth because between 2009 and 2014 Amazon.com, Inc. outperformed the market and the retail space.
A technical pattern called "wedge" has appeared on the chart and Carter Worth explained that this is a point where debate is going to end and the stock will break either up or down. He thinks that it is going lower because Amazon.com, Inc. had three gaps lower on a big volume since it recorded its 52-week high at $408. The gaps were followed by series of lower lows which combined is a sign of distribution.
Mike Khouw commented that he would not short the stock and the only way to make a bearish bet in this name is by purchasing the January 315 put for $16. The breakeven for this trade is at $299.
Posted-In: Carter Worth Mike Khouw Options ActionCNBC Options Markets Media
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Thanks for sharing such informative article… as I was doing a thorough research on Amazon , so this really helped me a lot.
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