Amazon Won't Surge on Its Earnings

Pay a visit to Amazon.com (AMZN - commentary - Cramer's Take) right now, and check out the homepage. If it's anything like the customized page that I see, you'll have to admit it's a big, jumbled mess.

It looks as if the company, which once stood for books and service, has faded into a shadow of its former self. Offering cameras, books, nutrition bars and parkas -- sometimes at a discount, sometimes at full price -- it has lost focus and become an oddball, online department store. It's a cross between the industrial chic of Costco (COST - commentary - Cramer's Take) and the bourgeois aspirations of a small-college bookstore, yet with none of the charm of either.

The company reports third-quarter earnings on Tuesday next week, and I am afraid the results will be just as mixed up. That won't do much for the shares. It's sad, really, yet emblematic of a market that may be on the verge of re-entering bear country.

A Sad Stock Story

Consider that in the past three years, Amazon shares have traced out the highly negative pattern that technicians describe as lower highs and lower lows. Shares fetched as much as $59 at the end of 2003 but had fallen to $45 by the end of 2004, and they still trade around that level now. In that time, the lows of the various cycles between those highs were $47, $39, $35 and $31.75. Psychologically, this means that holders were increasingly anxious to bail at lower levels believed to be peaks, and buyers were increasingly less anxious to purchase at levels that previously had provided support.

Since the start of 2004 alone, the broader market is up about 8%, and the Nasdaq is up about 6%. Yet Amazon, once the darling of Internet-based growth stocks and every bit as celebrated as Google (GOOG - commentary - Cramer's Take) is today, is down 12% over that span.

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Jon Markman, writer of TheStreet.com Value Investor, is the senior investment strategist and portfolio manager at Greenbook Investment Management, a division of Greenbook Financial Services. Separately, he is publisher of StockTactics Advisor, an independent weekly investment research service. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback; click here to send him an email.

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