Written by Rick Ackerman, Rick’s Picks
It would have suited my dour economic outlook perfectly if Amazon (NASDAQ:AMZN) had laid an egg when earnings were announced after Thursday’s close. The stock had already fallen more than 150 points in the days preceding the news, and there seemed to be little chance that it would reverse and surpass two peaks recorded in March. I’d said that such a move above would revive the flagging bull market, but my heart wasn’t in it. Better that the stock should continue to fall, reinforcing my gut feeling that the bull market begun in 2009 is over. Kaput. Finito.
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Instead, when the earnings hit the tape, AMZN erupted like Vesuvius, rocketing 249 points, or 16%, from the previous day’s low in mere hours. What are we to make of this? I’ve heavily promoted the idea that Amazon is the best proxy we have for the so-called smart money – a window into the thieving, rapaciously greedy minds of Wall Street’s best and brightest. I have also long regarded the stock as the perfect bellwether for the U.S. economy – even moreso than GM during its heyday more than a generation ago.
So where to next? My gut feeling is that AMZN’s rally into record territory is Mr Market’s way of setting the hook so that neither bulls nor bears will escape when the bear market, which may already have begun, comes a-roaring. It is practically unimaginable that the broad averages could keep pace with AMZN and some of the other lunatic stocks for long. Something’s got to give, and my guess is that the stock market will drag the wack-o stocks down rather than be pulled higher. In any event, you should use the 1699.04 target shown as a maximum price objective for the near term. There is no way the stock will push past it by much – certainly not on the first try. When AMZN subsequently falls, that’s when we should expect to see the broad averages keep pace or even lead the way lower.
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