Some tickers are easier to write about, and Amazon (NASDAQ:AMZN) stock is almost a blind buy on every dip. I am extremely confident that if the stock market in general is higher in the future, then so is AMZN stock. It will continue to reward investors who believe in it over the long term. However, the amazing part is that it still has way too many critics even in the face of this fact.
More to this point, Amazon is busier than ever during this tough test on Wall Street. It is one of the few companies somewhat benefiting from this crisis that crippled the rest of the world. Almost all of the shopping went online, and the biggest marketplace for that is the original e-commerce giant.
The fear of the novel coronavirus caused the world to shut down. So if we cannot leave the house, then we must shop online. That said, I bet many of us bought things on Amazon last month that we’ve never before. This will create new habits that will continue going forward after the pandemic. Some of this is luck, but a lot of it is the company placing itself in a great position of dominance.
Virus or not, the company has been executing almost flawlessly for over a decade. They are serial disruptors, and the retail sector was merely the beginning. Their second giant coup was owning the cloud. Now they have competition from Microsoft (NASDAQ:MSFT) and others giants, but they are all playing catch-up. Just yesterday we learned that Amazon will be making in-house games as early as next month. They also have forays in healthcare and dozens of other verticals.
Overall, we will eventually learn what they are chasing now behind the scenes — and the rest will always be one step behind.
Amazon Stock Thriving Under Great Leadership
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Jeff Bezos gets my vote for the best CEO of all time. This is a short list for me, and he beats out Steve Jobs, Bill Gates, Elon Musk and Warren Buffet. All of them are geniuses, yes, but Bezos’ team has maintained a jaw-dropping growth rate for decades. They never stopped being a startup, and that’s why Amazon stock has decimated the shorts for ever.
There is no viable long term thesis to short it. Not even the master shorts like Jim Chanos can make that bet. After a long holdout, Warren Buffett finally broken down and bought Apple (NASDAQ:AAPL) stock admittedly too late. Maybe one day we will learn that he would do the same with Amazon.
So far this year, the S&P 500 fell 35% from high to low at record speed. Equities are off the lows, but they are still trading in headline mode. Yesterday we learned that in just two weeks, 10 million people filed new jobless claims in the U.S. It is conceivable that we make a new equity low on shocking news, but the bottoming process is ongoing. My thesis is that the small caps have already set their low mark, but nothing is certain. This is all to say that this too shall pass, and there will be higher stock prices into year end.
Don’t Fight The Fed And The White House
Since most of the world is under stay-at-home order, governments are forced to spend trillions to keep the global machine afloat. In the United States, they are literally sending checks to people and offering almost free money to all businesses who need help.
Last night, we also got more details from Treasury Secretary Steven Mnuchin to suggest the White House will not let the airlines fail. The Federal Reserve is making sure that there is ample liquidity behind the scenes. The economy is also getting a giant fiscal relief plan, this is on top of the monetary commitment of unlimited bullets from Chair of the Fed Jerome Powell. The equity bears will have a problem fighting the Fed, the White House, and the brilliant scientists who will beat the pandemic.
So at these levels, Amazon stock is a buy because it has held strong in the face of tremendous adversity. It will lead the stock market up out of this hole. Furthermore, it has its own favorable technical setup. It has defended the $1,875 support so on a good day if they can take out the resistance above they can trigger a rally to set new all time highs.
Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here.
