22 Million Initial Jobless Claims, yet Amazon with new all-time highs?
While the US economic outlook dramatically worsened over the last few weeks, and will potentially continue to worsen as Initial Jobless Claims rise to over 22 million for the last four weeks as well as US retail sales falling 8.7% (showing the biggest 1-month decline since records began in 1992), Amazon (AMZN) pushed to new all-time highs.
Where do market participants take the optimism from?
What is the secret behinds Amazon's ongoing business success despite an economic crisis?
In our opinion, there were already signs of Amazon coming out strongly from the economic downturn with the expectation that especially small- and mid-sized "competitors" will be forced to shut down their businesses, which will potentially drive even more consumers into the arms of Amazon.
In fact, these signs can already be seen in the Retail Sales data last week. While US Retail Sales dropped, month-to-month, to an all-time low, Non-store Retail Sales rose by more than 3%.
In addition to that, the handling of the "Corona-Shutdown" and the economic downturn is another driver. Amazon's announcement to hire 175,000 more warehouse and delivery workers to keep up with the growing demand shows how strong the business outlook for the 1 trillion market cap company is.
With the economic life returning to normalcy somewhere in the future, Amazon will probably end up retaining customers whose loyalty it gained during the crisis.
How to trade Amazon (AMZN) in this environment?
Despite our long-term bullish outlook for Amazon, we'd be careful to buy into the push to new all-time highs.
In fact, we could imagine the move higher in US-Equities with the Nasdaq100 in fact trading in positive territory as of Friday, April 17, Year-to-Date to stand on a fragile fundament and anther leg lower in US-Equities to have an elevated probability which could also drive the stock of Amazon lower again, probably into the region of 2,000/050 USD per share, a potential mid-term-long trigger.
Technically the mode stays bullish above the SMA(200), probably even as long as we trade above 1,600 USD:
Source: Admiral Markets MT5 with MT5-SE Add-on AMZN CFD Daily chart (between December 24, 2018, to April 17, 2020). Accessed: April 17, 2020, at 12:10pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of AMZN increased by 117.78%, in 2016, it rose by 10.95%, in 2017, it increased by 55.96%, in 2018, it rose by 28.43%, in 2019, it increased by 23.03%, meaning that after five years, it was up by 495.4%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.