How to Fade the Amazon Rally

Today is day two of Amazon’s annual 48-hour Prime Day.

This Amazon-exclusive, summertime-version of Black Friday typically results in massive, record-breaking sales numbers for the ecommerce giant as customers hit “add-to-cart” on almost every discounted item you can think of.

In 2020, analysts estimate that Amazon made up to $10.5 billion on Prime Day alone. This year, that number could reach $11 billion or more, according to Adobe Analytics.

Numbers that big are typically share-movers. One would expect an $11 billion influx to push a stock higher, right?


I don’t think Prime Day can push Amazon higher. That’s why I’m fading the Amazon rally – and why you should too.

For a sneak peek into Amazon’s future, let’s take a look at the past. 2020’s Prime Day event began on October 13. And on that day, AMZN shares had risen 13% higher in one week.

But we’re interested in what comes after. And after October 13, AMZN dropped more than 13% into the end of the month.

The stock has already had a nice run higher into this year’s Prime Day event. It’s up 8% over the past month, and as I type, it’s close to its all-time high.

To me, that means that the stock is about to break lower. I don’t care how good this year’s Prime Day numbers will be – they won’t be enough to hold this rally above water.

Remember earnings season? Amazon, Apple, Google – they all posted great earnings numbers. And in response, the stocks sold off.
I’ve told you before about the fall of FAANG. And we’re about to see some sell-the-news action in AMZN that could sink the big-tech sector even further.

Buy all the products you want on Amazon’s Prime Day – just don’t buy Amazon itself.

Instead, you can fade the rally using puts. But AMZN is a $3,460 stock, meaning puts can be expensive.

That’s an expense, however, that you can cut using the strategy I told you about yesterday – a bear put spread.

Going Live: Thursday, June 24 at Noon

Yesterday, I told you about the pop in the bond market. But bonds weren’t the only assets that reacted to last week’s Fed meeting.

The U.S. dollar shot up as well. But it’s a rally that’s already breaking down – and now, I’m looking to fade the dollar.

And I want you to do it with me. This trade is less than $1 – and has the ability to yield an asymmetrical return. And I’m revealing it live on Thursday.

Join me right here – I’ll see you then!

VIX Traffic Light

And just like that, our VIX traffic light is back to red.

I had a feeling last week’s pop was just a blip – and that’s the thing about a yellow light. We know the VIX is about to move – but it could be either up or down.

In yesterday’s case, that move was down, going from Friday’s low-20s to just above 17 this morning.

I think volatility will continue to drop from here – turning our traffic light right back to red.

Mark’s Watchlist

  1. Exxon Mobil Corp. (NYSE:XOM)

XOM is a company with a clear advantage when it comes to rising oil prices. And that’s why it’s not the first time this natural gas company has found a home on my Watchlist.

After dipping on Friday, this stock crept higher yesterday and is set to continue rising as oil approaches $75 a barrel.

  1. Energy Transfer LP Unit (NYSE:ET)

At just $11 a share, ET is a cheaper way to cash in on rising oil prices – and it’s one of my favorite oil and energy stocks in the sector right now. Up almost 67% in the past six months, I see ET hitting $15 or higher once oil hits $75.

  1. Bank of America Corp. (NYSE:BAC)

BAC is B-A-C-K. This name was on my Watchlist last week, and I’m still keeping a close eye on the bank, as rising inflation will undoubtedly help out financial stocks like this one, which is already up 31% year-to-date.

  1. Advanced Micro Devices Inc. (Nasdaq:AMD)

This semiconductor fell into the red yesterday – and many days before that, to be honest. Down 10% year-to-date, AMD has room to run higher. And this could be your chance to buy the dip.

  1. American Airlines Group Inc. (Nasdaq:AAL)

This portfolio member announced yesterday that it was cutting its July flight schedule, canceling 1% of flights scheduled for the mid-summer month. It sounds like bad news, but it’s not. The reason AAL had to do this is because demand is that high. Meaning cash is about to pour into this travel stock, catapulting our current trade to an asymmetric win.

  1. Walt Disney Co. (NYSE:DIS)

Speaking of travel stocks – let’s talk about DIS.

What I love about DIS is all the different industries it dips into. You’ve got travel with its Disney parks, entertainment with its original moves and television shows, and not to mention its spot near the top of the streaming wars.

DIS hit an all-time high in March of this year. Now, it’s down about 2% YTD – giving it room to run higher during these summer months as travel booms.

  1. Walmart Inc. (NYSE:WMT)

Last but not least, we have my favorite retailer, WMT. As Amazon’s biggest competitor, WMT could see a jump as AMZN dips after Prime Day’s sell-the-news inevitability.

And that’s all for today, folks. Be sure to join me live on Thursday at noon ET for our next live session, where I’ll reveal a cheap option trade on the dollar that has the potential to yield an asymmetrical return.

Got any questions about the Fed meeting, trading the dollar, or cheap options? Then send them to me right here, and I’ll answer them during Thursday’s livestream!

Until next time,

Mark Sebastian


Leave a Reply

Your email address will not be published.