Amazon looks ready for a 40% rally, says market watcher

It could be the make or break moment for the FANG trade.

Facebook, Amazon and Google-parent Alphabet are set to report quarterly results in the next few days — one week after Netflix's steep slide following a slowdown in subscriber growth.

Of the basket of tech names, Piper Jaffray's Craig Johnson is watching Amazon closely, since he believes the stock could be on the cusp of a major breakout.

"From our perspective the moon and stars seem to be aligning here, both technically and fundamentally," he said of Amazon on Monday's "Trading Nation." 

From a technical standpoint, he notes that the stock's relative strength index has recently pulled back from overbought territory, and he says that a close above the $2,025 to $2,050 level would lift the stock out of the "consolidation range" where it has been stuck. Amazon closed at $1,985 on Monday, so it would need to rally just 2% to hit $2,025.

The company is expected to report quarterly earnings of $5.57 per share on $62.5 billion in revenue, according to estimates from FactSet. Thursday's earnings report could be the catalyst that lifts the stock out of that trading range.

Johnson said once the stock can break above that resistance level, there's a clear path to an all-time high of $2,700, which is about 36% higher than current levels and well above its current record of $2,050.

Strategic Wealth Partners' Mark Tepper also likes the stock, saying it looks good from a fundamental standpoint. He said "AWS and advertising are really working," and that these areas of the business continue to grow at "hyper speed."

Shares of the tech giant have gained more than 30% this year, but Tepper thinks the stock can still rise since "no other retailer can compete with them on one-day shipping, price, and convenience" and because it has created a "brand-new holiday for the American consumer" — Prime Day.

Ultimately, he sees another 15% to 20% upside for the stock.

"We love Amazon. It's our favorite of the FANG stocks. We have a 1-year price target in the $2,300 - $2,400 range, so we believe there's definitely some upside from here," he said in a telephone interview.

— CNBC's Lizzy Gurdus contributed to this report.

Disclosure: Piper Jaffray makes a market in shares of Amazon. Strategic Wealth Partners owns shares of Amazon.

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