Amazon primed for another comeback, according to the charts
Amazon (AMZN) last hit a new all-time high on Feb. 4. The company reported after the close two days later and that release was ill-received. The stock is now trading lower for the third time in the last four trading sessions. While it’s only been a few days, it’s not what many investors had hoped for, especially with the stock having done so well lately. In fact, from the August 2024 low to its most recent high, AMZN gained nearly 60%. From this perspective, the stock is allowed a breather… for any reason. The question now, of course, is what happens next? Well, if the last 15 months are any indication, then the stock has a good chance of rallying again: AMZN has performed well soon after releasing earnings since October 2023. It has had both good and bad reactions in the previous four reports, but each time, once it started to rally, it never re-undercut its lows near its earnings release date. For this to happen again soon, seeing the stock hold near its 50-day moving average would be a good first step. That’s because the 50-day line has acted as support over the last few months, with the stock bouncing near the 50-DMA. The 50-day line is currently near 227 and rising every day. Another significant characteristic of the recent strong run over the last few months has been seeing AMZN’s 14-day RSI bottom near the midpoint of its range around 50. Having the indicator continue to oscillate between the midpoint and overbought territory would show that momentum remains supportive. It would indicate that dips are still being bought. And dip-buying is what has kept this recent multi-month uptrend alive. AMZN, of course, is one of the biggest companies in the world. And over the last 25 years, it has been one of the best-performing stocks in the world, as well. However, AMZN has endured periods of underperformance along the way. Recently, the stock was net flat from August 2021 to October 2024. It finally cleared that last high this past November. So, while the stock has been rallying since the January 2023 low, it’s only four months removed from breaking out of a multi-year bullish pattern. As the long-term chart shows, once AMZN powered through prior multi-month (or multi-year) digestive phases, the ensuing extensions sometimes lasted much longer. Every time is different, but if AMZN can find a bid again after a subpar earnings reaction, it will have a chance to make another all-time high… and then some. Lastly, AMZN’s recent comeback has strengthened its relative performance against the MAGS ETF, of which it is a member. Given the performance discrepancy among the MAGS components lately, AMZN’s newfound strength has been a critical factor in keeping the ETF afloat. Maintaining this momentum would be essential to preserving the aggregate prowess of mega-cap growth stocks. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (Owns AMZN) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their 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 CONSITUTE 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.
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