Amazon (AMZN) Sees Minor Dip, Potential Bullish Continuation Expected

Technical Analysis

Amazon.com, Inc. (AMZN) traded on NASDAQ and closed at $194.49 on July 12, 2024, with a slight decrease of -0.29% (-0.56). The stock oscillated between a low of $193.83 and a high of $196.47 during the trading session. Currently, AMZN is trading near its 50-Day Moving Average ($187.01), comfortably above its 200-Day Moving Average ($164.06). The relative strength index (RSI14) at 57 indicates a neutral to slightly bullish momentum.

The MACD, registering at 5.40, points to strong upward momentum over the past three months. The average true range (ATR) of 2.06 signifies moderate volatility, setting a recommended stop-loss level at $185.59. Key support and resistance levels are identified at $193.25 and $195.05, respectively. Given the current setup, minor bullish continuation towards the resistance at $195.05 could be expected in the immediate term.

Fundamental Analysis

Amazon has a robust market capitalization standing at approximately $2.02 trillion, signifying its significant market presence. With a year high of $201.20 and low of $118.35, the stock remains closer to its peak, reflecting investor confidence. Amazon’s P/E ratio of 54.48 is relatively high, suggesting that the stock is priced at a premium compared to broader market averages.

Amazon boasts an EPS of $3.57, indicating solid earnings performance. The upcoming earnings announcement on August 1, 2024, is critical and could introduce increased volatility. Analysts have uplifted their EPS forecasts for Q2, projecting a potential beat based on Amazon's strong Q1 performance.

Key news factors include controversies such as compliance with a US agency's probe on worker discrimination, which may introduce transient uncertainties. However, the company's robust growth in sectors such as AWS and continuous innovation in AI can potentially drive long-term growth. Despite recent insider selling by Jeff Bezos, the fundamental outlook remains positive due to strong business sectors and maintained double-digit sales growth projections.

Intrinsic Value and Long-Term Potential

The discounted cash flow (DCF) analysis places Amazon's intrinsic value at $52.79, which starkly contrasts with its current trading price, suggesting that the stock could be overvalued based on DCF analysis alone. However, it's crucial to consider Amazon's brand value, technological innovation, and sector dominance which often justify its premium valuation in the market.

The consensus among analysts includes a strong representation of positive sentiment with one strong buy, 40 buys, and only three holds. There are no sell or strong sell ratings, aligning the consensus towards continued bullish sentiment for the foreseeable future.

Prediction for Next Trading Day and Upcoming Week

For the next trading day (July 15, 2024), Amazon’s technical outlook suggests a minor bullish trend, potentially aiming towards the resistance at $195.05. However, due to upcoming earnings and RSI positioned in a neutral zone, significant movement is not expected barring any market-altering news.

Throughout the upcoming week, anticipation of Q2 results could drive increased trading volumes and minor volatility. The stock may exhibit a range-bound performance between support and resistance levels as investors position ahead of the earnings announcement. The current price suggests a stock trading near the upper bound of its range, with an elevated intrinsic value based on future growth projections.

Considering all these factors, Equally weighing both technical momentum and robust fundamentals positions Amazon as a 'Hold' at the present level. Buyers may await a more compelling entry after earnings, while holders may benefit from sustained sector growth and innovation.