Amazon.com (NASDAQ:AMZN) has been one of the best performing stocks of the past decade. I’ve invested in Amazon over the years on two simple rationales: they will ultimately become the Walmart (NYSE:WMT) of the web; and, Jeff Bezos is one of the best entrepreneurs in American history. Where’s one place you can look to confirm those notions? Amazon’s stock chart.
As long time Wall St. Cheat Sheet readers know, ‘Technicals on the Stock Chart are Strong’ is one of the ‘T’s in our CHEAT SHEET investing framework. One of the high-level technical analysis tools we use when analyzing stock charts is the overall price trend of the stock. The stronger the stock, the prettier the chart.
As you can see in the two-year chart, this is not rocket science. Retail investors and traders spend too much time these days worrying about complicated technical systems or algorithms that hardly provide any value. So, we prefer to keep technical analysis simple and allocate it to only one prong of a more comprehensive investing framework.
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Clearly, Amazon’s stock is extended from its trend line in this chart. So, now might not be the best time to actually pull the trigger on shares if you’re making a shorter term investment. However, the textbook upward trend of Amazon shares should give you confidence to add Amazon to a watch list where you then buckle down to continue more analysis.
Investors interested in mental masturbation may declare this indicator too simple; but investors interested in profits laugh all the way to the bank when they choose stocks with strong upward price trends.