It Was A Great Day for A Post-Earnings View

Everywhere I read or watched coverage of’s earnings announcement, the theme was “are investors fed up with’s constant spending and lack of profits???” I have never understood why investors are willing to cut (AMZN) so much slack, but it is a resilience that should be held in awe…and traded.

Over the past few years, I have concentrated on a very simple post-earnings trade on AMZN: buy the open and sell within two weeks. Stop out if AMZN closes below its low on the first post-earnings day. Shorts are OK after that, but they are even riskier than the buying strategy. One of my last articles on the trade was aptly titled “ Returns to Typical Post-Earnings Behavior.” The trade was relatively consistent from 2010 to 2012 and started breaking down from there. I documented results through April, 2013 in a Google spreadsheet. I will be updating it again soon after Friday’s tremendous return of the trade. surges off its post-earnings low surges off its post-earnings low


AMZN jumped in choppy intraday fashion from its post-earnings open that happened to also be near the low of the day and the lower-Bollinger Band (BB). I bought shares and call options as I have done in previous times: call options to be sold on a quick pop and shares held for the potential of additional gains over the next two weeks. I held the call options for as high as a 73% gain before stopping out to preserve a 38% gain. I am still holding the shares. The big caveat with this trade this time around is AMZN trades below its 50DMA which also happens to align roughly with the lows of a trading range/consolidation phase from June 6 to July 10th. This could/should be stiff resistance.

Nightly Business Report covered AMZN’s earnings and covered all the themes and protestations that have accompanied AMZN’s latest display of losses:

Start at the 5:20 market…

Full disclosure: long AMZN

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