After pulling lower along with the rest of the market during the 2007-09 financial crisis, online retailing giant Amazon.com (AMZN) has continued its rally off the late 2008 lows in unabated fashion. Since then, the stock has lifted roughly 680% despite a few meaningful pullbacks along the way.
In other words, just like a strong stock should do, any pullbacks are being bought, and the steeper any pullbacks are, the more aggressively money comes flowing back into the stock and pushing it to new highs.
All of this is a vote of confidence for Amazon, even though by now at least some of the stock’s performance is driven by momentum funds jumping on the bandwagon. More importantly, however — and for the bulls, somewhat reassuring — AMZN is not a new stock for traders, but in fact one of the oldest and most powerful survivors of the dot-com era. This might at the margin make the stock less susceptible to a sharp demise given that traders and analysts are familiar with the company’s balance sheet and business strategy, as much as the latter is always subject to amendments as new avenues of revenue are being discovered.
In short, the stock continues to be a monster. And after another pullback recently staged a good rally, AMZN is now set up for another potential breakout to new all-time highs.
During the most recent market pullback in May-June, AMZN has continually showed relative strength vs. the S&P 500 Index. Yesterday, Amazon attempted a breakout past the Jan. 25 highs of $284.72, before coming off the intraday highs along with the broader market and settling just shy of those January highs. Still, the stock remains well-positioned to challenge (and eventually overcome) those highs — and if it can do so successfully, that will move AMZN toward the $300 area during the next two months or so.
Strong stocks remain so until proven otherwise, and AMZN currently remains well supported by the bulls and trend-following crowd.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.