Senior Market Strategist: Top Pick Has Room to Run

We identified AMZN as a bullish pick for 2023 back in December

CMT, Senior Market Strategist
Jul 6, 2023 at 3:27 PM
facebook X logo linkedin

Back in December, our very own Senior Market Strategist Matthew Timpane participated in MoneyShow's Top Picks special report for 2023. Six months into the year, two of his best investment ideas cracked MoneyShow's "Top 10" list. Below is a postmortem on Inc (NASDAQ:AMZN), and where to go from here. 

Making the Stock Pick to Start 2023

When we recommended AMZN in December 2022, the stock had found support near its 2019 lows in the high $80 range. An additional floor was emerging at the -50% year-to-date level, an intriguing discount opportunity given the company's top-dog status in the cloud services industry, and the recent layoffs that posed short-term pressure.

Inflation had hit Jeff Bezos' baby hard, so any inflationary relief in 2023 would seemingly boost shares substantially. The company was also slashing capital expenditures (CapEX) to increase free cash flow and enhance profitability in the second half of 2022. This could continue into 2023, and given a higher CF/CapEX ratio, could fund the acquisition of new, longer-term assets. In fact, the stock’s price/sales ratio was declining to 1.66. When the ratio sat near this level in the past from 2014 to 2015, it laid out a tremendous buying opportunity in the long-term. 

AMZN Moneyshow 2023

Where the FAANG Stock Sits Now

Fast forward to the end of July, and there's no shame in taking some profits up over 50%, especially as the stock stretches from its 200-day moving average and could consolidate. Watch and see how AMZN also handles its 50-day moving average, a trendline connecting March and may lows. You may want to reduce your position if it breaks below the 200-day, as a test could be in the cards. 

Large options traders are targeting more upside, with the September 135- and 145-strike calls popular, as well as the October 130- and November 150-strike calls. 

From a macro perspective, supply chains are normalizing and wage inflation is subsiding, as investors are now looking for improved margins, a catalyst we identified back in December, referenced above. beat first-quarter expectations with 9% year-over-year growth, and artificial intelligence (AI) adoption could produce a new wave of Amazon Web Services integration. 

Many positives around AMZN remain, but we’d take some risk off the table -- especially with that 200-day moving average lingering. However, we do want to maintain exposure for any more potential upside into year-end, especially with large option traders targeting a move above the $150 level – so there's potential for another +20% of upside. 

Options traders will be pleased to know that AMZN has rewarded option buyers over the past year. The equity's Schaeffer's Volatility Scorecard (SVS) comes in at 77 out of a possible 100, meaning AMZN has handily exceeded options traders' volatility expectations in the past 12 months. The stock's SVS sat at 88 in December. 


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI