Amazon (NASDAQ: AMZN) Shows Bullish Intraday Action Amid Overbought Signals & Strong Fundamentals, 3 weeks ago

Amazon Technical Analysis, Inc. (NASDAQ: AMZN) closed at $189.08 on June 21, 2024, reflecting a 1.60% increase from the previous day. The stock reached an intraday low of $185.87 and a high of $189.275, highlighting strong intraday price action towards its year high of $191.70. Current market sentiment appears bullish with the stock trading above its 50-day moving average of $182.95 and significantly above the 200-day moving average of $160.06. However, the RSI14 stands at 77, indicating the stock is in overbought territory and may experience short-term pullbacks.

Noteworthy is the recent spike in volume to 70.05 million, surpassing the average volume of 38.62 million. This surge suggests heightened investor interest and increased market participation. The ATR of 1.83 implies that the stock has seen moderate volatility. Key support and resistance levels are identified at $185.99 and $189.50, respectively.

The MACD, with a value of -0.561, suggests caution as the momentum might be weakening despite the recent uptick in price.

Fundamental Analysis

Amazon exhibits robust fundamentals with a market capitalization of $1.97 trillion, underscoring its prowess in the global market. The P/E ratio is notably high at 52.96, which may indicate the stock is potentially overvalued based on recent earnings of $3.57 per share. The DCF valuation stands at $51.74, suggesting that on a pure cash flow basis, the stock price is exceedingly higher than calculated intrinsic value, raising concerns about potential overvaluation in the current market price.

Given an earnings announcement date of August 1, 2024, investors should monitor the upcoming quarterly results, which will provide further insight into the company's financial health and growth trajectory. Analyst consensus towards Amazon is overwhelmingly positive, with 41 'buy' ratings and only 3 'hold' ratings. The target price consensus is $186.80, which is slightly lower than the current trading price, indicating a neutral to cautious short-term outlook from analysts.

Amazon Amazon's ongoing investments in AI and its significant position as the largest U.S. retailer illustrate its strategic initiatives to fuel growth and maintain a competitive edge. Recent news underscores Amazon's advantage over competitors like Best Buy and highlights its unstoppable growth and potential long-term value.

Performance Predictions

For the next trading day (June 24, 2024), technical indicators suggest a narrow range-bound movement between support at $185.99 and resistance at $189.50. The overbought RSI could lead to minor profit-taking, with possible consolidation near current price levels.

For the upcoming week, unless there are significant corporate announcements or macroeconomic changes, Amazon's stock might see limited upside due to its overbought status but should maintain strong levels due to positive sentiment and robust fundamentals.

Long-term Investment Potential

Amazon demonstrates substantial long-term potential driven by its dominant market position, strategic investments in AI, and diversified revenue streams. With strong growth trajectories and investor confidence reflected in analyst ratings, the stock is a formidable candidate for long-term investment, notwithstanding its current high P/E ratio and DCF indicating overvaluation. Investors may need to weigh the potential of future earnings growth against current valuation metrics.

Overall Evaluation

Given the comprehensive analysis, Amazon is categorized as a 'Hold' candidate. While the stock commands strong fundamentals and long-term growth prospects, its current overvaluation and overbought technical indicators suggest the potential for limited short-term gains and a possibility for near-term correction. Investors might find it prudent to await a more attractive entry point or additional financial data before increasing their positions.

Check full Amazon forecast and analysis here.