Amazon.com, Inc. stock may have hit a new intraday life-time high on Monday, but traders aren’t willing to reduce their bullish bets on the e-commerce giant.
Shares closed yesterday at $726.73; retracing from a high of $731.50, logged earlier in the session.
Amazon.com Sets Sight on $1000?
Amazon has soared over 50 percent since February. However, despite the stock trading at a very high multiple, widely followed options trader Pete Najarian reckons the rally has more legs.
“This is a monster growing company that dumps money (back) time and time again. And the market, for whatever reason, over the years has been able to embrace that and say that they are going to give them a pass,” Najarian said on CNBC.
“I think this stock can get over $1000…The last thing you need to keep an eye on is shipping logistics. That is the next part of the business that is going to push them over $1000,” he added.
Dan Nathan of RiskReversal.com agrees with that assessment. “If you’re going to place your chips on something, you would say Amazon has a much better shot to get there,” the “Fast Money” trader noted.
MKM Partners’ Rob Sanderson is another big Amazon “bull,” who thinks the online retailer is the best long-term growth story available to investors right now.
“We see unstoppable secular trends behind a multi-decade growth cycle,” Sanderson wrote to clients, before lifting the target price to $850 a share – 17 percent above last session’s close.
Amazon.com is a “Buy,” But Wait for a Pullback
Shares of Amazon have had an almost vertical run higher during the past fortnight. From a technical stand-point, a pullback is due. And the appearance of a bearish “pin bar” on Monday points to the fact that a short-term correction may be just around the corner.
Even popular indicators like Stochastic and Relative Strength Index are showing signs of exhaustion. This divergence between price and oscillator suggests a retracement is imminent. On the downside, the area around $710 should act as a strong support zone. If that is breached, AMZN buyers will likely enter at $700.
If indeed the stock corrects, traders could look for signs of reversal around these zones. One way to do that is to switch to a smaller time frame (1-hour, 4-hour chart), and then wait for the break of a higher pivot on considerable volume. Entering on a lower time frame should also present traders with a tighter stop-loss, and consequently, a more favorable risk-reward payoff.