Amazon.com Inc (AMZN)

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Amazon.com (AMZN) Breaks Out
By: Tom Bowley | March 31, 2023

U.S. equities are wrapping up the first quarter in grand style. The QQQ, which tracks the NASDAQ 100, is zeroing in on a 20% gain for the quarter, as I write this. We saw a huge rally in January 2023 and strong Januarys usually suggest a strong year ahead. Based on our Q1 performance, it'd be hard to argue at this point. There's more technical work ahead, which is to be expected after the completion of a cyclical bear market. If you follow the "20% rule", then the QQQ is now in a bull market, having moved up more than 20% from its low of 253.26 on October 13, 2022. That confirms the end of the 2022 bear market for the NASDAQ.

So, for now, let's assume the worst is behind us and we'll be looking at higher prices ahead. What stocks might we consider buying and why? Here are two that I like:

Amazon.com (AMZN)

If the stock market does well this year, it'll likely be due to the Fed hitting the brakes on interest rate hikes, promptly a lower 10-year treasury yield ($TNX) in the process. In that type of environment, I believe growth stocks will be where most of the leadership resides. Amazon.com (AMZN) certainly fits the bill. Technically, AMZN just broke out of a bullish inverse head & shoulders continuation pattern and broadline retailers ($DJUSRB) are finally showing relative strength:



There are a lot of positives here. Nothing has been confirmed yet, in terms of relative strength, but the improvement in 2023 is rather obvious. The February absolute and relative highs are key target levels. Moves above the February high would be extremely bullish.

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