Setting Free the Amazon Bears

Amazon (AMZN Quote) has come a long way since the late 1990s, when it sold books and nothing else. The tech giant is now a full-service retailer, offering everything from motorcycles to baby strollers. The transformation has been perfectly timed, aligning with a decade-long global shift toward online shopping.

Many Wall Street analysts thought Amazon would eventually fail in the intensely competitive net sales space, but it has defied critics year after year, posting healthy revenues that show great resiliency. The company even survived last year's meltdown better than its rivals, with loyal shoppers keeping the virtual cash registers ringing throughout the crisis.

What can traders and investors expect when Amazon reports third-quarter earnings after Thursday's closing bell? To answer the question, let's back up and look at its technical positioning from all angles.

Amazon (AMZN) - Monthly Source: eSignal

Amazon came public in May 1997 around $1.50 (post split) and immediately took off in a powerful uptrend. That rocket ride continued into 1999, when the stock topped out near $110. It then dropped into a double-top pattern that was broken to the downside when the tech bubble burst in 2000.

The subsequent decline was nasty and persistent, with the price losing over 90% of its value by late 2001, when it bottomed out at $5.51. Notably, the turnaround started a full year ahead of other tech stocks and the broad indices. This unusual strength characterized company performance during the middle of this decade, when it was a bona fide market leader.