Trading Stock Splits: Amazon (AMZN) & Alphabet (GOOGL)

Hey Traders!

 

Well, the day finally arrived. Amazon (AMZN) split its stock price, by 20:1. for a long time, it seemed as though a split was never going to happen. One of the primary reasons for this was because Jeff Bezos was at the helm, and he famously rejected the idea of a stock split. However, once he stepped back from day-to-day duties at Amazon, the new decision-makers decided it was time to make a split happen.

Now, Amazon announced their split at what I’d argue was the worst time to do so. This occurred on March 9th, 2022, right in the throes of market volatility. Based on the way in which rival mega-caps, Tesla (TSLA), Apple (AAPL), and Nvidia (NVDA) moved both pre and post-earnings, all eyes were on Amazon, to see if it would do the same.

However, this time, unfortunately, was different. Between weak price action throughout Q1, and then an eventual earnings spill in Q2, Amazon was unable to see the type of pre-split rally its rival market leaders had. Finally, about two weeks before the split, it began a bounce off the lows – into the split.

Yesterday, as Amazon shares began trading at their split-adjusted price, Amazon began the day with an attempt at a rally. However, that rally didn’t last long, and ended up the day up only +1.18%. Not much, especially given all of the investors that could finally buy full shares of Amazon.

So, are the day of the pre and post-split rallies dead? Prior to the cascade into Bear Market territory, I would have been willing to make a sizeable bet on an Amazon (and Google) rally going into earnings. Now, almost everything has changed.

At this point, betting on a move higher in Alphabet is a bit risky, but I’m still going to take a small stab.

Why? Because, at the same time, I can’t fully ignore the setup. Therefore, I am trading it – but small. I just want to get a little piece of it.

These are really the only two bullish trades I see out there right now. And, if neither of these can come through, that will only further cement my bearish case going into the end of June.

While it seems as though earnings have just wrapped up, in a few short weeks we’ll be starting looking at pre-earnings momentum again. If Google and Amazon can’t get anything going here, they may very well be my canaries in the coal mine.

Want to what levels I’m eyeing on these names? Check it out in the video below!

Follow me on Twitter for more up-to-date analysis, media segments, BBQ recipes, and more! 

Want to learn more? Join me for two days of live trading, on June 8th and 9th, from 1-3pm CT in my Diamonds in the Rough class.

Have a great rest of your week!

-Danielle

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