With just one trading day left in 2021, Amazon is up only 2.5% for the year. That badly lags the S&P 500 and Nasdaq, which are both up more than 23% in 2021.
On the plus side, all the FAANG components are up on the year, but only Apple (AAPL) - Get Apple Inc. Report and Alphabet (GOOGL) - Get Alphabet Inc. Class A Report (GOOG) - Get Alphabet Inc. Class C Report were able to beat the S&P 500.
Yet, Amazon continues to make the list for top stocks to buy for next year.
The point is, after a year of underperformance, investors want to know if Amazon will be able to come roaring back to life.
Trading Amazon Stock
I wanted to use a weekly chart here to show that Amazon stock is no stranger to long periods of consolidation. We saw it from mid-2018 to the breakout in 2020.
We’re seeing it again now, too.
All the while, shares continue to put in a series of higher lows while riding along the 50-week moving average.
The monthly chart also highlights just how tight the range is getting with this stock.
Should Amazon begin to push higher — either in the new year or after earnings in a couple of weeks — we’ll have to keep an eye on the $3,550 area.
Not only has that level been resistance for more than a year at this point, but the December high also sits just shy of $3,560.
Following an inside month in December, an inside-and-up monthly rotation over this level could help trigger a larger push higher.
In that case, the $3,750 level will be in focus — where the stock has previously double-topped — followed by the $3,950 to $4,000 area.
On the downside, a break of $3,250 could put the recent lows in play near $3,190. Below that and who knows, perhaps the $2,880 to $3,000 area is on the table.