Amazon.com, Inc. (NASDAQ:AMZN) stock increased in value by 23% in 2019 and investors are hoping to see that improve in 2020

Amazon.com, Inc. (NASDAQ:AMZN) stock increased in value by 23% in 2019 and investors are hoping to see that improve in 2020

Amazon.com, Inc. (NASDAQ:AMZN) stock increased in value by 23% in 2019 and investors are hoping to see that improve in 2020

Amazon (NASDAQ:AMZN) didn’t have its best year ever in 2019. The 23% increase in value for AMZN stock wasn’t terrible by most measures, but it didn’t come close to the sort of gains other tech giants saw. For example, Apple (NASDAQ:AAPL) — despite continued softening demand for the iPhone, its most important product — saw its stock grow in value by 85% on the year. Amazon stock lagged the broader markets as well. There is a good case to be made that 2020 could be a turnaround year for the company. However, there are also a number of risk factors in play that could prevent Amazon investors from celebrating in 2020. 

Of all of Amazon’s business units, the most critical to the company’s bottom line is Amazon Web Services (AWS). In the company’s last quarter, AWS accounted for just 13% of revenue, but the $2.26 billion in operating income for the division represented nearly 71% of Amazon’s profits. AWS revenue growth slowed in Q3 (analysts had been expecting that $2.26 billion would actually be $2.55 billion). That news was a big part of the 8% drop AMZN stock suffered after those Q3 earnings were announced.

Amazon also took a hit in 2019 when AWS lost its bid for a high profile — and high value — contract to competitor Microsoft (NASDAQ:MSFT). In October, it was confirmed that the Department of Defense had chosen Microsoft Azure over AWS for its $10 billion JEDI cloud computing contract.

AWS is the engine driving Amazon profits, and if the cloud computing division stumbles further in 2020, it won’t be good news for those hoping to see bigger growth in that Amazon stock price.

Government Regulation

One of the biggest threats Amazon faces in 2020 is a result of its success: government regulation. Amazon is in the crosshairs of Democratic Presidential candidate Elizabeth Warren’s proposed plan to break up big tech companies. There has already been talk about the possibility of spinning off AWS — Amazon’s profit center — as a result of regulatory pressure from the U.S. and European governments. The company is also under increased government scrutiny for issues ranging from worker safety, to the volume of packages impacting the USPS, to a growing number of deaths on the roads attributed to Amazon’s own delivery drivers.

Will AMZN stock have the turnaround year in 2020 that investors are hoping for? If there’s anything we’ve learned over the past several decades, it’s to never count Amazon out. That being said, there are obstacles to overcome if that Amazon stock price is going to beat its 23% growth for 2019. 

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 1,815.70.

The projected upper bound is: 1,951.01.

The projected lower bound is: 1,838.15.

The projected closing price is: 1,894.58.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.6239. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 65.30. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 3 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 87. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed down -14.890 at 1,891.970. Volume was 14% above average (neutral) and Bollinger Bands were 100% wider than normal.

Open     High      Low     Close     Volume___
1,898.0401,911.0001,886.4451,891.970 3,511,966
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,869.72 1,791.16 1,829.65
Volatility: 33 20 24
Volume: 3,879,658 3,026,259 3,486,281

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.

Summary

AMAZON COM is currently 3.4% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into AMZN.O (mildly bullish). Our trend forecasting oscillators are currently bullish on AMZN.O and have had this outlook for the last 12 periods.

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