Amazon reports today after the bell and the chart gives us some guidance -- and not of a positive sort.
The inability to get back over the 200DMA, along with a failed breakout over the last couple of days, is not encouraging. The weekly options are looking for a roughly $16 move on the bell this evening, which makes it real tough -- that's a big move in percentage terms but it's probably not overstating the case.
Chart-wise I'd be inclined to be short, but the risk here on any beat of expectations, given the fall from the highs, is extreme -- the potential for a squeeze is very real. Do note, however, that any such squeeze is likely not something that will hold up beyond a day or two as the short ratio is very low.
Of course with a 100 P/E the other risk -- on any indication of a potential miss forward (not so much on earnings, but expectations) -- is a big fat organic dump-fest southbound.
I just can't buy something with a 100 P/E and a P/E/G ratio of nearly six. That's ridiculous and shows that just to get back to reasonable expectations on PEG -- say, 2-2.5 -- the stock could easily get cut down to under $100!
No thank you, especially not with an operating margin of 2.5% and no dividend.
So I'm left with no good trade in front of earnings, but if there's a strong positive reaction and yet the internals of the release suggest deterioration in margins there might be a very juicy trade that becomes available in the aftermarket -- short. You'll have to read the release fast though and do your analysis on a snap basis, as this is not a trade you can enter mechanically unless you want to risk having your head ripped off.
Disclosure: No position as of this writing but as described in the article I may short it in the aftermarket.