BFLY vs AMZN: David vs Goliath
BFLY popped up in my Breakout scan for Wednesday, following a few days of heavy volume buying, on it ways towards tomorrow's earnings. But my interest was not to do with it as a great 'Buy' candidate, but was in part, based on an article from Safehaven about 'Vodoo' Technical analysis. And a developing Technical vs Fundamental argument on Roberto's NASDAQ Trader Blog.
In my background check on BFLY, Yahoo had listed a news article from the Motley Fool about Amazon, which had a passing (emphasis on the 'passing') mention on Bluefly. AMZN is certainly the opposite of what BLFY is in terms of scale of business, and profitability - so were there any parallels I could draw?
Fundamental analysis has its merits, but like Technical analysis, much of it is to do with projections based on prior trends. Unforseens (e.g. Katrina), will impact on the fundamental picture (albeit delayed), just as much as they impact on price (except impacts on price are more, or less, immediate). Is there a measure one can use to get a current reading on fundamentals, without the wait for an earnings report?
For an e-commerce website, I thought the site's Alexa ranking would give the most accurate measure for growing revenues. Taking the 2-yr Alexa chart for Amazon, one can easily identify a solid uptrend in web traffic dating back to late 2004.
Unfortunately, the steady increase in AMZN's web traffic was not reflected in earnings, or its share price.
However, what the AMZN price chart shows is the Big Money buying on the price dips. Then selling into strength, on moves to resistance. This buying occurred independent of earnings - it was a price phenomenon for perceived value in the company. It didn't matter if the company earned $0.82, $0.12, or $0.07 a quarter, Big Money liked the stock on dips to $35, and offloaded it at $45.
What does this all mean for BFLY?
Certainly, the prior fundamentals leave a lot to be desired, with increasing losses on each of the last 4 quarters.
Unfortunately, nobody appears to be paying much attention given recent volume buying. Combined with the breakout from a large bullish wedge.
At $1.40 it won't be garnerning much interest from Wall Street's Big Money. Therefore moves in BFLY will have more to do with the unified force of individual ants following a trail, rather than the action of the larger anteater preying on them.
As for BFLY's Alexa chart, I'll let you draw your own conclusions
For those who operate on fundamentals, BFLY's earnings are to be released at the market close.
BFLY AMZN
In my background check on BFLY, Yahoo had listed a news article from the Motley Fool about Amazon, which had a passing (emphasis on the 'passing') mention on Bluefly. AMZN is certainly the opposite of what BLFY is in terms of scale of business, and profitability - so were there any parallels I could draw?
Fundamental analysis has its merits, but like Technical analysis, much of it is to do with projections based on prior trends. Unforseens (e.g. Katrina), will impact on the fundamental picture (albeit delayed), just as much as they impact on price (except impacts on price are more, or less, immediate). Is there a measure one can use to get a current reading on fundamentals, without the wait for an earnings report?
For an e-commerce website, I thought the site's Alexa ranking would give the most accurate measure for growing revenues. Taking the 2-yr Alexa chart for Amazon, one can easily identify a solid uptrend in web traffic dating back to late 2004.
Unfortunately, the steady increase in AMZN's web traffic was not reflected in earnings, or its share price.
However, what the AMZN price chart shows is the Big Money buying on the price dips. Then selling into strength, on moves to resistance. This buying occurred independent of earnings - it was a price phenomenon for perceived value in the company. It didn't matter if the company earned $0.82, $0.12, or $0.07 a quarter, Big Money liked the stock on dips to $35, and offloaded it at $45.
What does this all mean for BFLY?
Certainly, the prior fundamentals leave a lot to be desired, with increasing losses on each of the last 4 quarters.
Unfortunately, nobody appears to be paying much attention given recent volume buying. Combined with the breakout from a large bullish wedge.
At $1.40 it won't be garnerning much interest from Wall Street's Big Money. Therefore moves in BFLY will have more to do with the unified force of individual ants following a trail, rather than the action of the larger anteater preying on them.
As for BFLY's Alexa chart, I'll let you draw your own conclusions
For those who operate on fundamentals, BFLY's earnings are to be released at the market close.
BFLY AMZN
