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Amazon (AMZN) Holds Strong Position for Long-Term Growth Despite Near-Term Caution

StockInvest.us, 2 weeks ago

Amazon Technical Analysis

Amazon.com Inc. (NASDAQ: AMZN) closed at $184.30 on June 7, 2024, down 0.38% from the previous trading day. The intraday trading range spanned from $183.36 to $186.29. The stock is navigating close to its 50-day moving average of $182.44, indicating consolidation around this level. Meanwhile, the 200-day moving average stands significantly lower at $157.80, highlighting a prolonged upward trend over the long term.

The Relative Strength Index (RSI14) at 49 suggests that the stock is in a neutral zone, neither overbought nor oversold. The MACD (3-month) at -1.25 hints at a bearish momentum in the short term, while the Average True Range (ATR) of 1.95 emphasizes daily price volatility. Support is pegged at $179, and immediate resistance is identified at $184.72.

Volume analysis reveals that the recent volume of 26.18 million trades stands below the average volume of 39.05 million, indicating lower participation from traders which could signal caution in the market.

Fundamental Analysis

Amazon's market capitalization is $1.92 trillion, reinforcing its colossal presence in the market with substantial influence. The price-to-earnings ratio (PE) of 51.62, compared to the broader market, indicates that the stock is priced at a premium, likely reflecting investors' expectation of significant future earnings growth.

Earnings per share (EPS) stand at $3.57. Despite the high PE ratio, the underlying bullish sentiment is supported by a consensus analyst rating of "Buy," highlighted by strong buy ratings and target price estimates.

DCF valuation of $49.65 versus the current price of $184.30 indicates that the stock might be overvalued on a pure DCF basis. However, this disregard may be due to Amazon's multifaceted growth avenues in e-commerce, cloud services, and AI advancements, deemed as future growth drivers.


Amazon Next Trading Day (June 10, 2024)

Given the current technical indicators' neutral to bearish momentum, minor downside risk could persist, potentially testing the support level at $179. The stock might trade between $183 and $185, barring significant market-wide sentiment shifts.

Upcoming Week

The stock is expected to oscillate between support at $179 and resistance at $184.72. A breakthrough above resistance could target the year high of $191.70, while failure to hold at support might test $173.21 (stop-loss level).

Intrinsic Value and Long-Term Investment Potential

Despite a potentially overvalued current market price based on DCF calculations, Amazon's future potential in high-growth sectors like cloud computing, AI, and streaming services justify its premium valuation and long-term investment viability. Recent expert endorsements and positive outlooks from wealth managers further bolster confidence in its growth trajectory.

Overall Evaluation

Category: Hold

Given Amazon's strong market position, substantial growth potential, and favorable analyst sentiment, the stock appears poised for long-term gains. However, considering the near-term technical signals of a neutral-to-bearish outlook and overvaluation concerns, cautious optimism is advisable. "Hold" reflects confidence in the stock's underlying fundamentals while acknowledging potential short-term market fluctuations.

Check full Amazon forecast and analysis here.