It’s not necessarily the stocks that have fallen the farthest that you want to buy after a dip. On the contrary, if a stock shows exceptional resilience when the market is falling, it will often push higher faster than other when the market rebounds. Of the market’s two bad days, Amazon began the first having just announced a far more profitable fourth quarter than anyone expected. That raises the question: how powerful would Amazon become if in addition to being a sales giant, it became a profit giant as well? AMZN shares went from $1,390 to $1,442 between the opening bell on Friday and the closing bell on Tuesday. I expect shares will trade at $1,700 by the end of the year, and maybe quite a bit higher.
Chart courtesy of www.stockcharts.com