Amazon.com, Inc. (NASDAQ:AMZN) stock looks like it has only just begun to flex its muscle

Amazon.com, Inc. (NASDAQ:AMZN) stock looks like it has only just begun to flex its muscle

Amazon.com, Inc. (NASDAQ:AMZN) stock looks like it has only just begun to flex its muscle

Has the market gotten ahead of itself? Depending on where investors look, there’s definitely room for debate. But not so for mega-cap Amazon (NASDAQ:AMZN). Following a recent earnings release, Amazon stock looks like it has only just begun to flex its muscle. Let me explain.

On Wall Street today, Elon Musk’s Tesla (NASDAQ:TSLA), Richard Branson’s Virgin Galactic (NYSE:SPCE) or maybe Tim Cook’s Apple (NASDAQ:AAPL) are Wall Street’s stocks for weighing if the market has gone too far and far too quickly. It’s a polarized investing climate to say the least. But Amazon stock is a very different story, favoring higher prices right now.

On the heels of Amazon’s recent fourth-quarter earnings release, the company and its shares are firing on all cylinders. Off the price chart the diversified tech giant posted a rebound in net income despite rising costs and toppled Street profit estimates by more than 60% on earnings of $6.47 per share. That’s far from shabby to say the least. It’s also not all Amazon delivered either.

Sales were similarly pleasing as Amazon announced stronger-than-forecast revenue growth of 21%. The results were spearheaded by a solid 32% increase in subscription businesses such as Prime, a 34% jump from Amazon Web Services unit and 41% from its ‘other’ advertising business.

Finally, Amazon also offered upbeat guidance for the first quarter.

The one blemish is the company doesn’t have “any visibility” on the coronavirus’ impact. Bottom line, though, investors had a lot to act enthusiastically about. And that still unequivocally includes the price chart.

If there had been any questions regarding Amazon’s underperformance over the past year, those concerns were put to rest in the aftermath of the company’s earnings report. With the post-earnings follow-through in Amazon stock, shares are roughly 5.5% above what all investors should uniformly label a breakout from a 17-month corrective base. It’s bullish. And with the monthly view showing an opening up of the Bollinger Bands and the stochastics trending higher inside neutral territory, shares are still in a buyable position.

Conservatively, I’d put a price target of $2,450-$2,500 on Amazon stock over the course of 2020. The estimate simply, but importantly, looks at the size and length of the base in coming up with an eyeballed price determination. So while other high-profile stocks might be due for their own time in the penalty box, when it comes to Amazon, shares are offering an attractive risk-adjusted opportunity for bullish investors.

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 1,982.50.

The projected upper bound is: 2,246.21.

The projected lower bound is: 2,076.05.

The projected closing price is: 2,161.13.

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 23 white candles and 27 black candles for a net of 4 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with AMAZON COM). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 58.0275. This is not an overbought or oversold reading. The last signal was a sell 4 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 73.24. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 32 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 60. This is not a topping or bottoming area. The last signal was a sell 4 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 13 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed down -17.120 at 2,153.100. Volume was 8% below average (neutral) and Bollinger Bands were 229% wider than normal.

Open     High      Low     Close     Volume___
2,173.0702,176.7902,127.4502,153.100 3,131,342
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 2,133.79 1,913.95 1,847.18
Volatility: 19 28 26
Volume: 3,669,635 3,790,647 3,495,574

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 16.6% 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 41 periods. Our momentum oscillator is currently indicating that AMZN.O is currently in an overbought condition.

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