PreMarket Prep Stock Of The Day: Amazon

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

There are obvious catalysts to move an issue higher, such as an earnings beat or an upgrade by a Wall Street analyst. Then there can be the not so obvious one such as the time period leading up to a well-publicized event.

On June 21-22, Amazon.com, Inc. AMZN will have Prime Day and the price action leading up to the event makes it the PreMarket Prep Stock Of The Day.

Now That Is A Trading Range: For the most part, Amazon has been in a trading range from $3,000-$3,500 over the past 11 months. The issue has spent very little time under $3,000 and above $3,500. While it usually a slow grind when moving from the extremes, it has had an impressive move over the last nine sessions.

Rotation Plays A Role: Certainly one important factor in Amazon’s rally this week has been another round of vicious sector rotation that has been so prevalent over the last few months. The flavor of the past few weeks has been out of the financials and other issues that do better with higher interest rates and into the mega-cap growth technology sector.

This divergence is best illustrated by the horrible performance of the Dow Jones Industrial Average repelling off its all-time high, while the Invesco QQQ Trust Series 1 QQQ made a new all-time on Thursday powered by big tech.

Prime Day: Although it hasn't been in the mainstream media that much this week, it will be all over it next week. News outlets will publicize the billions of dollars that are being raked it repeatedly. All of a sudden, they will focus on how close Amazon is to making a new all-time high. The constant stream of positive comments may lead more investors to go along for the ride.

Moving Forward: With the actual event taking place on Monday and Tuesday, there is certainly room for more upside.

With the issue performing well in a weak tape in Friday’s session, lower by $6 at $3,483 as of 2:45 p.m. EST, it's hard to predict the rally is close to being over, Also, with the issue now within striking distance of its all-time high ($3,552.25) from September, there may be more upside.

From an optimistic point of view, how high could Amazon go if it finally breaks out of its nearly year-long consolidation pattern?

Price Don’t Lie: Of course, there is a chance that the opportunistic buyers from the last few weeks are waiting to unload to the latecomers. If one is to take that approach to the rally, then it's imperative to make a new all-time high and just keep going. If not, the late buyers to the issue will be selling into a much more difficult one on the decline as opposed to having your offers being lifted today and perhaps into Monday and Tuesday.

The discussion on Amazon from Friday’s show can be found here: