Amazon Stock Hits All-Time High

Amazon.com, Inc. (AMZN) stock is trading at an all-time high on Tuesday morning after the company announced that it will hire 75,000 workers to keep up with exploding demand triggered by the nationwide pandemic shutdown. The new hires will add to 100,000 employees joining the payroll in the past four weeks as the company takes additional market share from brick-and-mortar storefronts and stressed-out supermarket chains.

Market share gains could be permanent because many retailers are struggling to survive, raising the odds for a flood of bankruptcies that bolster Amazon's market domination. Even so, this may be a two-edged sword in coming quarters because the company is likely to become a major political target, especially with CEO Jeff Bezos' ownership of The Washington Post. However, at least for now, everyone is grateful that the e-commerce giant is finding work for unemployed Americans.

AMZN Long-Term Chart (1997 – 2020)

The company came public in a May 1997 initial public offering (IPO), opening at a split-adjusted $1.44 and entering an immediate uptrend that topped out near $110 in the second quarter of 1999. A December breakout attempt failed at $113, marking a high that wasn't challenged for the next 10 years, ahead of a broad trading range that broke support near $40 in June 2000. The subsequent decline ended in the single digits in 2001 after the stock relinquished more than 95% of its value.

A bounce into 2004 retraced 50% of the bear market decline and stalled, marking resistance into a 2007 breakout that ended just 12 points below resistance in the fourth quarter. The stock held up relatively well during the 2008 economic collapse, dropping to a two-year low, ahead of bullish price action that completed a round trip into the 2000 high in October 2009. It broke out immediately, establishing leadership in the slowly developing bull market.

Price action held within a rising channel into a 2018 breakout that reached $2,050 in September. It sold off with broad benchmarks into December, finding support at a 10-month low, and rallied within 15 points of resistance in July 2019. A February 2020 breakout failed after hitting a new high at $2,185, yielding a vertical decline, following by a V-shaped recovery wave that completed the first quarter breakout on Tuesday.

The monthly stochastic oscillator entered a buy cycle at the start of 2020 and still hasn't reached the overbought level, establishing a stiff tailwind for higher prices. In addition, the March turnaround started at a rising trendline going back to 2016, indicating that the current advance could add many points in coming months. The $2,500 mark looks like a logical upside target, but the stock could exceed that lofty level in coming months.

AMZN Short-Term Chart (2017 – 2020)

The on-balance volume (OBV) accumulation-distribution indicator ended a long-term buying phase in August 2018 and rolled over into year end. Buying pressure into April and July 2019 as well as February 2020 failed to reach the prior high, establishing tough resistance that could slow or stall progress in coming weeks. For now, market players should watch the slow April uptick for signs of exhaustion that could trigger a multi-week pullback.

Finally, the uptick has reached a rising trendline generated by the 2018 and 2020 peaks, raising the odds for a reversal similar to what happened between May and July 2019 (rectangle). In addition, the rally off the March low left behind an unfilled gap at $1,925, which is situated just a few points under the rising 50-day EMA. In turn, this highlights the potential for a bull trap that undercuts the psychological $2,000 level and offers a lower-risk entry for sidelined investors.

The Bottom Line

Amazon stock has rallied to an all-time high above $2,200 but could offer a more advantageous trade entry below $2,000.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.