Sign InAmazon Stock Shows Bullish Trend with Potential Corrections - Hold Recommendation
Summary
Technical analysis indicates that Amazon's stock is in a bullish trend with positive momentum, but the stock is nearing overbought conditions, suggesting a potential price correction, while fundamental analysis shows strong earnings potential but a relatively high valuation, leading to a 'Hold' recommendation. (August 2023)
Technical Analysis
Amazon.com, Inc. (AMZN) closed trading on August 10, 2023, with a share price of $138.56, reflecting a 0.52% increase from the previous close. The day's price swung between a low of $137.49 and a high of $140.41. The current 52-week range stands between $81.43 (year low) and $146.57 (year high).
The stock's volume for the trading day stood at 51.71 million shares, slightly below the average volume of 60.55 million shares. Amazon's market capitalization is at $1.42 trillion, reflecting its heavyweight status on the NASDAQ Exchange.
In terms of trend analysis, the 50-Day Moving Average stands at $129.22, and the 200-Day Moving Average is at $106.23. The stock's present position above both moving averages suggests a prevailing bullish trend. The three-month MACD is at 0.62, also indicating positive momentum. Additionally, Amazon's RSI14 stands at 63, signaling a moderately overbought condition - investors may want to watch for possible price corrections.
Amazon's ATR (average true range) at 2.80, can be an indicator of future volatility. This suggests that the stock may fluctuate by up to $2.80 from its current price on the next trading day, August 11, 2023.
Fundamental Analysis
Amazon's earnings per share (EPS) at $0.42 coupled with its P/E ratio at 329.9, underscores a strong earnings potential, albeit with a higher valuation compared to other stocks. Amazon also has a large number of outstanding shares, with 10.26 billion shares on market.
Using the discounted cash flow (DCF) value of $143.85 as a preliminary target price suggests a potential upstream from the current price level. While the price targets provided point towards a high of $270 and a low of $103, the consensus of $162.6 and the median of $159.5 both suggest moderate optimism.
Amazon's support level is at $130, while its immediate resistance level stands at $139.57. The establishment of these levels could serve as crucial turning points in the stock’s future price movements.
Concerning relevant news, recent reports highlight Amazon's ongoing antitrust issues, its contribution to global environmental initiatives, the rising impact of robotics in the industry, and a strategic plan to drop several in-house clothing brands which could have implications on its earnings.
Outlook and Recommendation
Based on the technical indicators, Amazon's stock is in a bullish trend, with indicators suggesting positive momentum. However, the stock’s RSI indicates that the stock is nearing overbought conditions, which may lead to a potential price correction.
The company's fundamental indicators suggest strong earnings potential but relatively high valuation. There is ongoing optimism about the company’s prospects, given the consensus price target.
Considering the overall data, a 'Hold' recommendation is suggested for Amazon's stock. This is in light of the current bullish trend, optimism in the company's future prospects as shown by the DCF and price consensus, and consideration for the slightly overbought situation which might see moderate downward corrections in the near term. The next trading day, August 11, 2023, and the following week will be crucial periods of observation for investors to monitor these expected trends. However, it’s also important to consider the ongoing issue with FTC and internal strategic changes which could impact future earnings.
