This year has been tough for stocks. Despite a strong earnings season and the tech-heavy QQQ staging a dramatic 34% recovery rally from March to June, most of the Magnificent 7 stocks have underperformed. In my book, Mean Reversion Trading , I emphasize that I am a firm believer in the premise that a rising tide lifts all boats. If the broader indexes are pushing higher, the rest of the major equities will eventually follow. With this logic in mind, I am revisiting one of the lagging Mag 7 giants for this specific trade: Amazon (AMZN), and am relying on three of my favorite technical signals to time the setup: 1. Accelerated MACD (5, 13, 5): I prefer this faster MACD setting to catch momentum pivots before the rest of the market wakes up. Although the MACD indicator is currently staging a bullish crossover, both the MACD and signal lines are tightly coiled. This specific coiled action usually leads to false positives, which is exactly why we must use other indicators as confirmation before risking capital. 2. Relative Strength Index (RSI): To provide that necessary confirmation, let’s look at the RSI. Although AMZN never technically dropped into the official oversold region (which is very typical during a macro bull market), it came incredibly close. After hovering near oversold levels for the entirety of June, the RSI is now staging a sharp upward move. This aggressively confirms that institutional money is finally beginning to flow back into this tech giant. 3. Directional Movement Index (DMI): The DMI is my go-to for assessing the internal health of a trend. It tracks the DI+ (green line) for buyers and the DI- (red line) for sellers. A downtrend is clearly established when the red line dominates the green. However, when these lines begin to converge and change direction (known as a DMI crossover), it provides the very first footprint of a structural trend change. We are starting to see this exact DMI crossover setting up to trigger any day now. Catching these aggressive sentiment shifts in real time is incredibly difficult for any human trader. That is exactly why I built Maya, an algorithm grounded entirely in technical analysis with zero emotional bias. Maya is extensively backtested for the last 10 years and has returned near 42% ROI since its launch in April 2025. If stepping back from the screens and utilizing a 100% rules-based system interests you, feel free to check out the details here: https://tradewithmaya.com/autotrading The Trade Setup: AMZN 240-245 Bull Call Spread To play this catch-up bounce, I am targeting the 240/245 bull call spread. With AMZN currently trading right around $240.14, we can get filled on this structure for a limit price of roughly $2.50. This pricing keeps position sizing effortless. For instance, scaling into a 4-contract position means risking exactly $1,000 to potentially walk away with a matching $1,000 in profit. As long as AMZN moves past the $245 mark by our expiration date, this setup allows us to literally double the money risked in less than 30 days. Here is my exact trade setup: Buy $240 call, Jun 24th expiry Sell $245 call, Jun 24th expiry Contracts: 1 Cost: $250 Potential Profit: $250 —Nishant Pant Founder: https://tradewithmaya.com/ Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Play a catch-up bounce in Amazon using this options play, Nishant Pant says
