Best FAANG Stock for Q2

AMZN stock could rally this spring, if history is any indicator

Mar 28, 2019 at 1:15 PM
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While Google parent Alphabet (GOOGL) has been one of the worst stocks to own in April, historically, another FAANG stock could shine soon: Amazon.com, Inc. (NASDAQ:AMZN). According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the e-tail behemoth has ended the second quarter higher 80% of the time over the past 10 years, averaging a gain of 8.53% -- making it one of the best stocks to own over the next three months, if history repeats.

Since touching an annual low of $1,307 on Dec. 24, the shares of Amazon have rallied close to 35%, and recently climbed back atop their 200-day moving average. The equity has spent most of March consolidating its gains atop the $1,750-$1,760 region -- an area that capped rally attempts in late 2018. At last check, AMZN was down 0.4% to trade at $1,758.54 -- a similar second-quarter rally from current levels would put the FAANG stock around $1,908.54, in territory not charted since early October.

AMZN stock chart March 28

Wall Street is certainly betting on an extended Amazon recovery. The security boasts 26 "buy" or better ratings from analysts, compared to one "hold" and not a single "sell." Plus, the consensus 12-month price target of $2,074.67 stands in still uncharted territory for AMZN shares.

Echoing that, options buyers have been much more bullish than usual in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.47 is in the 98th percentile of its annual range. This points to a much healthier-than-usual appetite for long calls over puts on the FAANG name in the past two weeks.

Peak call open interest in the front-month series lies at the April 1,700 strike, home to more than 5,000 contracts outstanding. With AMZN trading well north of this level, it's unlikely the security will run into any options-related resistance in the near term.

 

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