Amazon.com, Inc. (NASDAQ:AMZN) Stock By the Numbers
Earnings were a miss on EPS but a beat on revenues . AWS came in below expectations but is still grew at 37% year-over-year. I look for that trend to continue.
Several analysts came out in defense of the stock recently. Mike Binger of Gradient Investments thinks investors should use any weakness to be a buyer of AMZN stock, citing relative immunity to any tariff turmoil. MKM Partners reiterated a “buy” rating with a $2,350 price target, up from the previous target of $2240.
And frankly, I agree. The selling has gotten too heavy in Amazon. It is incredibly oversold on a technical basis – the 9-day RSI was below 20 and at the lowest levels of the past six months. MACD printed under -20 and is also at an extreme. Implied volatility has spiked to recent highs.
Overall, Amazon stock is trading at by far its biggest discount to the 20-day moving average over the past half year. The last time AMZN stock approached such oversold metrics, back in early summer, proved to mark a significant intermediate-term low in the shares.
More importantly, after those eight consecutive down days, AMZN stock finally had a reversal day yesterday. Amazon briefly traded lower on the day, only to sharply reverse course. It closed significantly higher than that low – but still lower than its open. This type of price action is many times emblematic of a low in the stock, especially after such a brutal drop. The sellers have finally become exhausted and the buyers are hinting at taking back control.
The spike in implied volatility (IV) signals high levels of panic – and high levels of option prices. It is also a contrarian buy signal and sets up ideally for a covered call trade or option bull put spread to capture this rich premium.
Bottom Line on Amazon
Earnings weren’t great, but the stock got punished too hard for it. AWS is still surging and it’s still the name to beat in online retail. Even recent news that Fedex (NYSE: FDX ) would end their partnership seems to have hurt FedEx more than Amazon.
Investors and stock traders should consider buying AMZN stock near current levels and selling the Sep $1,900 call. The premium received for the call will cushion the downside while positioning to be a seller at $1,900.
Option traders may look to sell the Sep $1,725 puts and buy the Sep $1,720 puts for a $1.75 net credit. Return on risk is 53%.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 1,869.50.
The projected lower bound is: 1,715.58.
The projected closing price is: 1,792.54.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with AMAZON COM). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 21.6953. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.72. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -109.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 16 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 13 period(s) ago.
Rex Takasugi – TD Profile
AMAZON COM closed up 5.570 at 1,793.400. Volume was 100% below average (consolidating) and Bollinger Bands were 78% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,861.95 1,894.75 1,750.06
Volatility: 23 27 44
Volume: 4,173,703 3,615,615 5,215,783
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
AMAZON COM is currently 2.5% above its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect moderate flows of volume out of AMZN.O (mildly bearish). Our trend forecasting oscillators are currently bearish on AMZN.O and have had this outlook for the last 6 periods.
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