14-day Premium Trial Subscription Try For FreeTry Free

Technical Analysis: AMZN Indicates Potential Consolidation in Short-Term, Positive Momentum in Medium-Term

StockInvest.us, 1 month ago

Amazon Technical Analysis

Amazon.com, Inc. (AMZN) closed the last trading session at $145.24, which is close to its 50-day moving average (MA) of $144.64, but still well above its 200-day MA of $128.69. This indicates a general positive momentum in the medium-term, but a potential consolidation in the short-term. The Relative Strength Index (RSI) of 45 reflects neutrality, suggesting that the stock is neither overbought nor oversold. The Moving Average Convergence Divergence (MACD) at 2.66 is positive, indicating a potential continuation of the bullish trend in the near term.

With a high of $146.59 and a low of $144.53 in the previous session, the stock shows a daily range (ATR) of approximately $2.01. Considering this volatility and the closing price almost in the middle of the session's range, it suggests a balance between supply and demand at the current price levels. AMZN appears to be facing resistance near the $146.88 level, with support around $132.71.

Based on these technical indicators, one could expect a potential retest of the resistance level in the next trading day or upcoming week, especially if market sentiments carry forward the positive momentum, likely resulting in minor price increases if resistance is not broken.

Fundamental Analysis

Amazon currently flaunts a market capitalization of approximately $1.50 trillion with an earnings per share (EPS) of $1.92. It is trading at a price-to-earnings (PE) ratio of 75.65, which could be construed as high compared to traditional market averages, indicating that the market may be expecting future growth in earnings. Analyzing the discounted cash flow (DCF) valuation, which stands at $60.86, suggests that the stock might currently be overvalued based on future cash flow projections.

Amazon The equity research consensus tags AMZN as a "Buy," with 38 analysts recommending a buy and only 3 suggesting a hold; there are neither sell nor strong sell recommendations. This collective optimism may stem from recent news stating that Amazon's sales are shifting toward higher-margin services, which could result in improved profit margins over the next decade. Additionally, it has been reported that Amazon's cash flow is soaring, potentially allowing for reinvestment and margin expansion.

Furthermore, with the earnings announcement approaching on 01/31/2024, investors may anticipate positive news, which could contribute to the stock's performance in the upcoming week.

Stock Performance Predictions

For the next trading day on January 08, 2024, the predictions are leaning towards a stable to slightly positive performance, given the stock's proximity to its resistance level and the neutral RSI. For the upcoming week, the stock is likely to be influenced by overall market sentiment and the anticipation of the earnings report. Positive market conditions and analyst expectations could propel the stock towards breaking through the current resistance level.

Overall Evaluation

Given the above analysis, AMZN would be categorized as a 'Hold' for the conservative investor due to its high PE ratio and DCF valuation indicating an overpriced status. However, the stock could be seen as a 'Buy' for growth-oriented investors, particularly looking at the company's pivot towards high-margin services and Amazon's historical trend of defying conventional market valuations with exceptional growth. The bullish analyst consensus, coupled with the positive news surrounding the company's service sector and cash flow, also contribute to this optimistic outlook. It would be prudent for investors to closely monitor the stock around the earnings release date for any potential volatility that may provide a clear direction.

Check full Amazon forecast and analysis here.