Going to watch AMZN closely tomorrow

[whodi]

As I mentioned before, when I shorted the stock, I expected traders to take profits and it dropped over 1 point rather quickely, and then the buyers stepped right back in and AMZN had a nice close. Depending on how the market opens and reacts tomorrow. I think if the market starts pulling back some, traders will again take profits and I expect selling to take place. This stock has moved up so fast, and when that happens, a lot of traders are up so much, so quickly they start to dump when they see any signs of weakness, thats why when you have a stock thats trading at high volume, it comes down so fast with the market and vice versa. I wouldnt be surprised to see it hit 70 levels but I am going to watch very closely for weakness to get into a short position but I will not try to guess a top. Like I did today, I will wait until the time is right and the stock is in a position to enter based upon the technical levels and moving averages.

[whodi]

Here is an article I found, which shows that there are so many people short on this stock that a lot of today's gains were also contributed to a short squeeze, which means if there are a lot of shorts and the stock is rising strongly, the shorts start covering in panic mode and the stock flys. That is the main reason I would only daytrade this stock and not get trapped. I would also have a tight stoplosss to protect my losses. Good article to read.

NEW YORK, May 21 (Reuters) - The shares of online retailer Amazon.com Inc. (AMZN,Trade) rose nearly 8 percent to a 7-year high on Monday after Citigroup raised its price target to $67 and amid pressure on investors betting against the company.

Citigroup, which also repeated its "hold" rating on the stock, cited the company's strong outlook.

"Optimistic remarks from Citi and a short squeeze resulting from Amazon.com shares climbing to a seven-year high fueled a sharp increase in its options volume," said Paul Foster, an options strategist at Web information site theflyonthewall.com in Chicago.

"The spike in its shares put some investors who have short positions on the defensive as they scrambled to adjust their positions."

According to April data from the New York Stock Exchange, about 11.8 percent of Amazon's total shares outstanding are held in short positions, which gain value when the underlying stock falls. The amount of short positions grew 4.2 million shares from March.

"Investors were certainly impressed with the execution that Amazon exhibited in the first quarter," Jackson Securities analyst Brian Bolan wrote in a research note.

"Current estimates for Amazon are likely too low, as we are among the most aggressive on Wall Street, but we believe that estimates will rise soon, which in turn should push the stock price higher," wrote Bolan, who has a "buy" rating on Amazon's stock.

Seattle-based Amazon, which is the world's top online retailer of music on compact discs, said last week that it will launch a digital music store later this year with millions of songs, free of so-called DRM copy protection technology that limits where consumers can play their music.

Citigroup analyst Mark Mahaney praised the move in a research note.

"Amazon's recent announcement of a DRM-free digital music download store incrementally increases the company's ability to continue its robust topline growth," Mahaney wrote.

By Monday's close, put and call option volume were both far ahead of normal, according to market research firm Track Data.

Investors who purchase put options estimate the stock will drop below its exercise price before the expiration date, while calls increase in value as a stock rises.

Many option traders speculated on a stock swing in either direction and turned to straddle combinations, which require the simultaneous purchase of the same strike call and put at the same expiration.

The shares, which have risen nearly 74 percent this year, rose 7.9 percent to close at $68.30 each on the Nasdaq. (Additional reporting by Doris Frankel)