Amazon.com, Inc. (NASDAQ:AMZN) has been on a spectacular rally over the last couple of weeks. That includes an eight-day winning streak, and AMZN stock touching new all-time highs on a daily basis.
Amazon shares are up 9% since March 24, while the S&P 500 is up just 1.3%. Even the tech-heavy Nasdaq Composite is up just 1.7%.
The relative strength of a stock of Amazon’s size is remarkable, and should not be ignored.
Amazon’s Chart
As you can see on the chart below, the beginning of the current winning streak started a major breakout for AMZN stock. After hitting an all-time high in October of last year, shares pulled back to a multimonth low as the big tech names lagged in the environment surrounding the election. Then, a rally into the end of 2016 and beginning of 2017 had Amazon back at all-time highs near $850-$860 in February.
Amazon spent the majority of March consolidating those gains, but a breakout above resistance near $860 at the end of the month now has the shares powering into uncharted territory.
The news surrounding Amazon has been bullishly lately, and BMO Capital Markets recently upgraded the stock and raised its price target to $1,000. The firm cited Amazon’s potential to become a major player in the $200 billion advertising sector as reason for the upgrade.
Well, I agree. And I suspect the stock will continue moving higher in the weeks and months ahead.
That said, the current momentum has AMZN stock is in extremely overbought conditions — as noted by the relative strength index (RSI) located at the bottom of the chart — so I’d look for a few days of healthy selling before building a position. The stock has support around $860 (the black line), so any pullback near that level would be a buy signal.
Bottom Line
While a $1,000 price target may sound incredible, I don’t think it’s out of the question in the near future, especially as stocks tend to trade toward large psychological levels — think Dow 20,000.
I would recommend making sure you’re invested on a pullback before AMZN stock makes a run at quadruple digits.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.
