| | | | It’s Crypto Day for the MLK Holiday
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
The stock market’s closed for Martin Luther King Jr. Day, but the crypto market never sleeps so I’ll be live for Morning Monster at 9:15 a.m. ET — Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Amazon Is Trading at a BIG Discount Compared to Walmart and It Won't Last
Something odd is happening in the market right now, and most traders aren't noticing it.
I was doing some checking around recently and discovered that Amazon (AMZN) is trading at a significant discount compared to Walmart (WMT). Not a small discount either — we're talking about a 25% valuation gap that makes no logical sense when you look at what these companies actually do.
Here's what I mean: WMT trades at around 38 times earnings right now. It's been on an absolute tear, hitting new highs as investors pile into what they see as safe, predictable consumer staples.
For every dollar WMT earns, traders are eagerly handing over $38 dollars to own the stock. They're paying for safety — the comfort of knowing people will always need to buy groceries and everyday essentials.
Meanwhile, AMZN trades at only 29 times earnings. Let that sink in for a moment. The company that dominates online shopping with over half of the entire U.S. market share, runs the digital plumbing of the internet with AWS powering everything from Netflix to the CIA, and stands as a bonafide leader in the AI revolution — that company is cheaper than a brick-and-mortar retailer.
Why? Fear. A classic story of market psychology.
Investors worried about a potential economic slowdown are dumping anything that smells like tech or growth and running to perceived safety of consumer staples.
Why Fear Creates Opportunity
It's an emotional decision, not really a logical one. Think about it — AMZN has robotics, warehouse technology and data centers with AWS. That's the part of the company that's actually growing hand over fist, like a weed popping out of the pavement everywhere there's a crack.
This is a classic case of what legendary investor Benjamin Graham called Mr. Market having a bit of a meltdown. The market in its short-sighted wisdom is offering you a chance to buy a company at the forefront of e-commerce, cloud computing and AI at a valuation cheaper than a big box retail store.
The Technical Setup Supports the Thesis
Now, I'm not saying WMT is a bad company. They're probably going to keep killing it, especially as long as the consumer is stressed. But it is by most objective measures quite expensive right now for the growth potential it offers.
AMZN has its own risks for sure, but the price you're being asked to pay for that risk today is unusually low compared to the growth they're experiencing. The market is focused on the next six months and forgetting about what's coming over the next six years.
From a technical perspective, AMZN is consolidating right now with an upside target of $265. This is a high-probability setup with a stop around $211, just below the recent low. The pattern shows an initial bounce in an uptrend that typically lasts about 45 candles on average — a little over two months from entry to target.
The setup allows for some back-and-forth movement. It can pull back and hit support levels again before moving to the target. The key is understanding the bigger picture here.
This is a chance to be greedy when others are fearful and buy a spaceship for the price of a pickup truck. When valuation anomalies like this appear, they don't last forever. Eventually, the market remembers what it forgot, and by then the opportunity is gone.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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