Amazon – trend remains strong

Despite some recent weakness, there isn't much to suggest a bearish outlook for Amazon stock.

It has been yet another bumper year for Amazon stock, with the price up 30% since 1 January, compared to 14% for the Nasdaq and 8% for the Dow Jones. There seems little to stop further gains, and from a technical and seasonality standpoint, the outlook remains encouraging. 

The all-time high in Amazon shares occurred on 6 June, and since then they have fallen back. However, the bulls defended the $945.46 level, which was support throughout June. It makes sense to expect further gains, although a deeper retracement to the longer-term trendline, which has held since February 2016, could provide a more attractive entry point. This would suggest a move back down towards $930.

Amazon chart

We should note Amazon’s seasonality, which is traditionally weaker in the July-August period. Over the past 19 years, the average return is 1% for July and 2.2% in August. So the shares may well continue their ascent, but the real performance will come later in the year.

Amazon return chart

Regardless of worries about the strength of the fundamental outlook, and potentially high valuations, the chart remains a bullish one, and there is no reason to think that one of the great stories of the past two decades is about to turn sour. 

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