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Amazon Stock: Will It Ramp Up Into 2022?

Amazon bulls, focused on the company’s long-term narrative, have been overwhelmed by bears concerned about short-term challenges. Will AMZN stock find momentum into the end of 2021?

2021 has been a volatile year for Amazon stock  (AMZN) - Get Amazon.com, Inc. Report. Although returns have been positive so far this year, AMZN share price has swung quite a bit along the way. Long-term bullishness seems to have found resistance from shorter-term skeptics, as the Seattle company continues to fight very tough COVID-19 comps in the e-commerce segment.

Figure 1: Amazon's box in a Christmas tree.

Figure 1: Amazon's box in a Christmas tree.

With only a few weeks to go in the year, the question remains: can Amazon stock finally head higher and regain momentum ahead of 2022? Or will shares drag through this holiday season?

(Read more from Amazon Maven: What History Says About Amazon Stock in December)

AMZN: bulls vs. bears

Amazon’s bull thesis tends to be grounded on long-term growth expectations that seem to be intact. As we have discussed previously on this channel, Amazon is still projected to gain market share in e-commerce, cloud computing and advertising over time.

But bears seem worried about the near-term challenges presented by the pandemic and the growing pains of being such a dominant player. Amazon, for example, has been accused of anti-competitive practices. Also, Q3 earnings showed how the heavy investments in logistics and infrastructure can hurt the P&L.

A look at the technicals

Not many analysts on Wall Street buy into the bear argument. In fact, not a single sell-side expert tracked by TipRanks has set a price target below the stock’s current levels.

FXStreet’s Clay Webster, however, looks at the issue from a technical perspective and raises a yellow flag. He believes that recent technical trends indicate a likely near-term price drop. Webster notes that the RSI (Relative Strength Index) has not reached 70 recently, suggesting that the market is still cautious towards Amazon.

Figure 2: AMZN's relative strength index.

Figure 2: AMZN's relative strength index.

TheStreet’s Bret Kenwell sees things differently. As bulls hope to revisit the July all-time high of $3,773, Brett thinks that this holiday season could be the opportunity for AMZN stock to break through the previous ceiling. If this happens, he sees the next stop at $3,975.

Figure 3: AMZN weekly vs. monthly hollow candles chart.

Figure 3: AMZN weekly vs. monthly hollow candles chart.

Investors should focus on the long term

At a high level, 2021 has proven to be a great year for the stock market. The S&P 500 has climbed over 20%, never entering correction territory. But underneath the surface, growth stocks like Amazon have had a much rougher ride.

For this reason, we think that investors should focus more on the business fundamentals that impact the long-term trajectory of Amazon stock. Trying to anticipate AMZN’s December moves (we touched on the subject recently) is a more relevant question for traders and speculators.

(Read more from the Amazon Maven: Amazon Stock in 2022: Growth At A Reasonable Price)

Is the price right?

Looking at a company’s business fundamentals is only half the work needed to find a good stock. How much one pays to own the shares is a key factor in the success of any investment. This is why valuation analysis is so important.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Amazon Maven)