Buy Amazon as a 'catch-up' trade to the market, says Carter Worth

Amazon, a notable year-to-date market laggard, is recommended as an excellent 'catch-up' trade, anticipated to advance approximately 8% to its former all-time high of $242.52. Additionally, the stock is suggested as a strong long relative trade against Walmart, advocating for buying AMZN and shorting WMT.

Analysis

Amazon (AMZN) is being presented as a tactical investment opportunity based on its significant year-to-date underperformance relative to major market indices. The stock's 2.8% gain lags behind the SPDR S&P 500 ETF (SPY) at +6.5%, the Invesco QQQ Trust (QQQ) at +8.7%, and the Technology Select Sector SPDR Fund (XLK) at +10.5%. Based on this laggard status, the analysis suggests two distinct trade ideas. The first is a straightforward long position, or a "catch-up" trade, with an explicit price target of $242.52, representing its former all-time high and an approximate 8% upside from its current level. The second recommendation is a pair trade, advocating for a long position in AMZN coupled with a short position in Walmart (WMT), which positions AMZN for relative outperformance. The rationale for these trades is primarily based on technical analysis, as referenced by the mention of supporting charts in the source material.

Key Decisions for Investors

• Investors could consider the proposed tactical long position in Amazon as a 'catch-up' trade, targeting the prior all-time high of $242.52, given its documented underperformance against key tech and broad market benchmarks.
• For those seeking a market-neutral or relative-value strategy, the long AMZN and short WMT pair trade offers a vehicle to speculate on the outperformance of Amazon over Walmart.
• It is important to recognize that this bullish thesis on Amazon is predicated on technical positioning and its status as a market laggard, rather than any new fundamental catalysts mentioned in the article.