Amazon reports earnings next week. The stock has momentum. Momentum means the line went up before the thing happened. This passes for analysis now.
Technical analysts love momentum because it requires no knowledge of what Amazon actually does. The chart goes up at an angle. That angle has momentum. You could be looking at a dog food company or a semiconductor manufacturer or a website that sells everything including dog food and semiconductors. Doesn't matter. Line goes up equals momentum equals buy more.
Retail traders will read "momentum on their side" and think Amazon hired momentum as a consultant. They'll picture momentum in a conference room at AWS headquarters, pointing at a whitboard, explaining how to beat estimates. Momentum doesn't work for Amazon. Momentum is just yesterday's price action being polite enough to continue today.
The article says Amazon has momentum "going into the report." This is like saying you have momentum going into a coin flip. The earnings report will say whatever it says. The number will be the number. But sure, the stock went up last week, so that definitely affects what Andy Jassy tells the accountants to write down.
Here's what momentum actually is: other people bought before you, the price went up, and now you're supposed to feel good about buying higher. It's FOMO with a physics term attached. Newton's first law states that an object in motion stays in motion until earnings disappoint by two cents and the stock gaps down eleven percent at 4:01 PM.
The real momentum here is the momentum of financial media needing to publish eight hundred words about nothing three times a day. That momentum never stops. That momentum could power a small city.
Amazon will report earnings, the stock will move, and everyone who bought because of "momentum" will learn that momentum works both f*cking directions.
Photo by Marques Thomas on Unsplash
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