At the top of Tuesday's "Mad Money" program, host Jim Cramer told viewers that investors shouldn't be buying stocks that need economic tailwinds, rather they should be buying secular growth stocks that can flourish even without a recovery. Cramer gave a nod to Amazon.com (AMZN) as it continues to dominate fast, in-home delivery of goods.
A stock like Amazon, Cramer concluded, can create its own destiny with the best products and services.
We have not written about AMZN since the end of last year and gave an upside price target of $2,008 and noted that, "E-commerce is alive and strong and AMZN shares should benefit with higher prices in the weeks and months ahead. Stay long."
With prices some $700 higher than our last price projection, we are overdue to check out the latest charts of AMZN.
In this daily bar chart of AMZN, below, we can see that prices rallied into February and then declined with the broad market into March. From the middle of March shares have surged about $1,000 in what could be a "measured-move pattern." Prices are above the rising 50-day moving average line and the slower-to-react but rising 200-day moving average line. The daily On-Balance-Volume (OBV) line has been strong since the March low and tells us that buyers of AMZN have been more aggressive. This kind of buying confirms and supports the price gains. The Moving Average Convergence Divergence (MACD) oscillator is bullish and turning upwards now for a fresh outright-buy signal.
In this weekly bar chart of AMZN, below, we can see that prices made a long sideways consolidation around the $1,800 area. It is not unusual to see prices double (or even more) from large consolidations. Prices are above the rising 40-week moving average line. The weekly OBV line has been bullish for the past three years. The MACD oscillator in this longer time frame has been bullish all this year.
In this Point and Figure chart of AMZN, below, we can see a potential upside price target in the $3,066 area. The potential measured-move pattern on the daily bar chart (above) gives us a target in the $3,200 area.
Bottom line strategy: In the long history of the stock market there have been many stocks that have traded at seemingly high price levels. Some people react that prices are too high and others stay with the trend to wherever it goes. The trend is up and we have targets (for now) of $3,066 and $3,200. $3,600 would be a double from the large consolidation pattern. Longs need to risk to $2,400 for now.