Can Amazon Shares Break Out on Record Online Holiday Sales?

Amazon is finally starting to move well as we approach year-end. Is the stock set for a big 2020?
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Amazon  (AMZN) - Get Report was gaining steam in Thursday’s trading session, rising  2.5% after the e-commerce giant revealed its dominant position amid a record holiday sales push.

According to the company, it sold billions of items globally, tens of millions of Amazon devices and in just one week added more than 5 million new Prime trials or memberships. Further, Prime one-day or same-day sales nearly quadrupled year over year.

The move comes as e-commerce sales capture a record amount of holiday retail sales. 

In other words, the leading e-commerce juggernaut had a very good holiday season, even if it’s not evident in the stock price. That makes it a perfect pick for Real Money’s Stock of the Day.

It’s not that Amazon has done poorly this year per se - up 21.7% - but it badly lacks its peers and the broader market. For instance, the PowerShares QQQ ETF  (QQQ) - Get Report has risen 38.1% in 2019, while Apple  (AAPL) - Get Report, Microsoft  (MSFT) - Get Report and Alibaba  (BABA) - Get Report have gained 82.4%, 55.7% and 57.1%, respectively.

Will that change in 2020?

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Trading Amazon Stock

Daily chart of Amazon stock.

Daily chart of Amazon stock.

A look at the daily chart above shows the less-than-stellar action of 2019. Again, it hasn’t been a bad year for Amazon stock, it just hasn’t been as good as many investors had hoped.

However, Thursday’s holiday sales news was helping give the stock a boost. Amazon stock continues to trade in a channel (blue lines) and has been doing so for several months.

Further, the 200-day moving average has been acting as resistance, after failing as support in September. The $1,825 level has been acting as resistance as well, while the $1,700 mark has been support.

After bouncing off channel support in mid-December, AMZN stock quickly reclaimed its 50-day and 20-day moving averages and coiled in a sideways pattern for more than a week. Moving out of that consolidation pattern now, Amazon shares face a critical point on the charts.

At the $1,825 level and 200-day moving average now, bears are looking to keep Amazon stock in check while bulls are looking for a breakout. If buyers can push Amazon through this level, channel resistance between $1,840 and $1,850 is next.

It’s a breakout over this mark that could fuel serious upside in 2020. It puts a run up to the $1,950 to $1,975 area on the table, with $2000+ possible above that.

If resistance holds strong, look to see if channel support currently near $1,750 supports the stock. Below puts range support near $1,700 on the table.