2 Ways to Trade Amazon Ahead of October's Prime Day

Shares of Amazon.com Inc. (NASDAQ: AMZN) were trading just above $220 on Tuesday morning, continuing to retreat from a stubborn layer of resistance around $240. We’ve flagged this level before as a potential triple-top risk, and the longer Amazon fails to clear it, the louder the bears will be. This is a pivotal moment for a stock still only a few big green days away from its all-time highs.

It’s made all the more critical because the company’s banner Prime Deal Days event is only a few weeks away, and could provide precisely the kind of catalyst bulls need.

The company confirmed the two-day sale will run from Oct. 7- 8, effectively bringing the start of the holiday shopping season forward. 

Bullish Expectations 

This annual event has repeatedly delivered record-breaking sales and injected solid momentum into the stock price. Wall Street analysts are increasingly optimistic that this year will be no different. Truist Financial, for example, reiterated its Buy rating on Amazon stock last week while boosting its price target to $270, echoing Wedbush’s recent Outperform rating and $250 target. 

These updated targets imply as much as 20% upside from current levels, not to mention fresh all-time highs if Amazon can finally break free of resistance. There are two clear ways for investors to think about the setup right now.

Strategy #1: Buy Ahead of Prime Day Momentum

The first approach is to buy in now, ahead of the event, on the expectation that history repeats itself. Amazon’s Prime promotions have become key drivers of consumer spending patterns and Q4 earnings momentum, consistently showing up as growth accelerators.

By kicking off the sale earlier than usual, Amazon is giving itself an even longer runway into the critical holiday quarter.

Front-running this setup involves believing that October’s Prime Day headlines will trigger a share rally. Amazon continues to lead in e-commerce and is aggressively expanding into high-growth sectors like advertising and cloud computing. Coupled with the broad support from a dovish Federal Reserve benefiting tech stocks, the macro environment looks especially promising for a Q4 surge.

Buying in ahead of October 7 also allows investors to capture the full move if Amazon breaks $240 and runs toward the $270-$280 zone analysts point to.

For those already bullish on Amazon’s long-term growth story, this week's pullback from resistance might be a well-timed entry point.

Strategy #2: Wait for a Confirmed Breakout

The more cautious option is to wait for confirmation. For Amazon, that means watching for a high-volume breakout above $240, followed by several sessions where the stock holds its ground. This kind of decisive move would neutralize the triple-top risk and signal that the next leg higher is underway.

Yes, this approach means potentially buying slightly higher, but it avoids getting caught in another failed rally. Amazon has already been turned back multiple times this year from the same level, and if it happens again, shares could easily slip back toward the $210 mark. 

There's a chance this means you might be sitting on your hands for a few more weeks, but waiting for confirmation—possibly after Prime Day—ensures you only get involved once the bulls have clearly regained control.

Risks to Keep in Mind

Even with strong analyst backing, however, risks remain. Prime Day discounts, while good for topline sales, can weigh on margins, and tariff uncertainty continues to hang over the broader retail sector.

Amazon’s heavy investments in AI and cloud infrastructure also mean elevated costs, and investors will be keen to see how these initiatives translate into actual revenue and earnings when the company reports in late October.

The most recent earnings report in July showed Amazon again topping expectations, a pattern investors expect to continue. But with the stock trading so close to its highs, the margin for error is slim. Any hint of slowing momentum in AWS or margin trends could see the bears pounce, regardless of how Prime Day goes.

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The article "2 Ways to Trade Amazon Ahead of October’s Prime Day" first appeared on MarketBeat.