Amazon has been on a tear over the past few weeks, and it has everyone wondering “Is this the real deal?”
To find out, Jim Cramer consulted the fortune teller of the stock market, charts, and got my take on whether or not this is a great time to get in on buying more Amazon.
As we head into the holidays, this is typically a time of strength for Amazon. However, reinvigorated competitors like Wal-Mart, Target and Alibaba are putting pressure on Amazon from all sides. Can it continue to deliver?
“Bob Lang thinks that Amazon, which set a new all-time high slightly less than a year ago but is now down 20 percent year-to-date, could be ready to rebound,” Cramer said.
Historically, Amazon has delivered during the holidays with excellent sales numbers. The stock has rallied dramatically over the past four or five years between November and New Year’s, signalling serious interest both before and after that time period.
Looking at Amazon’s daily chart, we immediately notice the Moving Average Convergence Divergence line (MACD), an indicator that helps technicians spot when a trend could change. Amazon made a bullish crossover less than two weeks ago and has spiked since that time. From my perspective, this as a very positive sign for the stock, as this kind of movement has been a consistent indicator of strength in several other stocks.
The weekly chart painted a different picture for me, though. While the daily chart showed Amazon breaking out of a downtrend and forming a new trend, the weekly chart showed that Amazon is still stuck below the downtrend line, at $328. Reviewing the MACD indicator, I saw that it is very close to making a bullish crossover, per the daily chart. I think that, if the stock can break out above $328, then a nice move up will happen.
“My view? Simple: Don’t bet against Amazon when Christmas is right around the corner … even as I think Amazon’s stock is ridiculously expensive versus almost all other Internet plays, especially Alibaba, I don’t think the holiday season will be any different this time around,” said Cramer.
