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Why Amazon (AMZN) Could be in Prime Position For Serious Gains

By:
Rob Isbitts
Published: Jul 15, 2025, 18:42 GMT+00:00

Key Points:

  • Amazon shares sit just 7 % below record highs, with the 20-day EMA rising and momentum indicators aligned for a potential breakout ahead of late-July earnings.
  • AMZN has finally crossed back to outperform QQQ on a 3-year rolling basis, marking a fresh relative-strength catalyst after two years of lagging.
  • A 65 ROAR score implies roughly two-thirds odds of a 10 % upside move first, reinforced by Amazon’s low leverage and unrivaled e-commerce/cloud moat.
Why Amazon (AMZN) Could be in Prime Position For Serious Gains

I know I’m not getting any props for extolling the virtues of retail giant Amazon (AMZN). You know that the stock is part of the Magnificent 7, a leading player in the capitalization-weighted S&P 500 (SPY) and Nasdaq 100 (QQQ), and the reason my doorbell rings so often.

For those of us who remember AMZN as a company that simply sold books online, Jeff Bezos’ $800 million wedding may not have been to everyone’s taste. But it’s what you can afford to do when you revolutionize modern commerce. That’s what AMZN has done, and their moat is about as wide as it gets. I’m not into the idea of “one-decision stocks,” where you buy them and never have to sell them. But if I had such a list, this stock would be atop it.

Still, the stock is not cheap. And by some measures, it never has been. And you see where that got the perma-bears. However, companies with low debt ratios and iconic brands might be the least vulnerable if the stock market finally does what it really should, and pull back from this recent monster run.

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Show me the charts!

I’m a technician and a quant, and now into my 60s, having done it that way since I was a teenager, I don’t expect that to change. So using that vantage point here for the first time, here’s a trio of pictures that, to me, make the case for considering AMZN, for intermediate and long-term time horizons.

There are some daily stock price charts that look a lot sexier to me than that of AMZN, and I’ll look forward to bringing those to you regularly. But this one shows a solid uptrend in progress, with just enough upside (7% to all-time high) to justify considering it here.

What do I see that leads me to that take? It starts with the 20-day exponential moving average. Without that trending up and staying up, any chart to me is one I’ll have less conviction with.

That’s especially the case with the Percentage Price Oscillator (PPO) indicator at the bottom looking quite content. But not upwardly-mobile, as it was in late April. See that combination of 20-day EMA and crossover in the PPO back then? To me, that’s how a 30% move in under 3 months can happen, as it did for AMZN.

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That’s in the past, and while AMZN is not the steal it was earlier this year, it is still a stock that gets the benefit of the doubt in a market that has yet to tip over. Earnings are not until the last day of this month, so there’s at least a trader’s time frame to navigate this one.

A while back, I created a proprietary stock and ETF grading system called ROAR (Reward Opportunity And Risk), which analyzes the chart as I do, but without my own eyes. It is on a scale from 1 to 100, and essentially tries to estimate the probability of a security going up 10% before it goes down 10%. In other words, in which direction is the next 10% change likely to be?

For AMZN as of this writing, I calculate a 65 ROAR Score. I estimate a nearly 2 in 3 chance that

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The weekly chart below is similar, which is not significant in itself. However, that 20-week moving average is encouraging in its direction and strength. Unlike daily charts, the weekly doesn’t get pushed around as easily.

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What I truly enjoy about this type of analysis is that while the technical charts above help frame up the story for me in a way that chatter about narratives and headlines (like AMZN prime day being a failure) just can’t rival. There’s another feature here that I look for whenever possible. A quantitative “catalyst.”

This last chart below might just be that catalyst. We see how AMZN was a serial outperformer on a 3-year rolling basis for much of the past decade. But since 2022, it has underperformed QQQ (purple line consistently below orange line).

But look what we have here! AMZN just crossed over again. And after a period in which its 3-year total return was negative, it is back to doubling every 3 years. That is meaningful to me.

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What’s the risk?

As great as AMZN is, and as optimistic as it looks price-wise, remember that position sizing is perhaps as important as what we own. The more markets correlate, the more true that is. And while this stock appears to be making a relative comeback, it will not likely appreciate in a market that turns decidedly south.

And if you wholeheartedly disagree with this post, may I suggest researching AMZD. That’s Direxion’s -1X AMZN bear ETF, one of several inverse ETFs on Mag-7 stocks, which also have a wide range of leveraged funds too.

About the Author

With 40 + years in the markets, Rob Isbitts leads Sungarden Investment Publishing. A veteran of seven bear markets, he champions an “Avoid Big Loss” discipline, using systematic technical and quantitative analysis to help investors profit in any climate.

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