Courts on Both Sides of the Atlantic Rule against Amazon.com, Inc. (NASDAQ:AMZN)
Much like Amazon’s mega-tech counterparts Alphabet (NASDAQ: GOOGL , NASDAQ: GOOG ), Apple (NASDAQ: AAPL ), and Facebook (NASDAQ: FB ), court-related challenges have begun to plague AMZN. Thanks to a federal appeals court ruling, courts can now hold Amazon liable for products sold by third parties. Third-party sales account for about 58% of the sales on Amazon’s platform.
Retail remains a thin-margin business. However, due to the fees AMZN collects from third-party sales, it earns higher margins from such transactions than from the sales of its own products.
AMZN’s legal struggles affect it outside of the United States. In the U.K., the nation’s Competition and Markets Authority has ordered Amazon to pause its investment in a grocery-delivery startup called Deliveroo . As the justification of its decision, the regulator cited “reasonable grounds” to believe the companies would not remain distinct if Amazon moves forward with the investment.
The Legal Setbacks Have Not and Should Not Hurt Amazon Stock
But in a blow to those hoping for a buying opportunity, AMZN stock seems to have been mostly unaffected by the news. Although rulings that limit the growth of its retail business could lower its revenue growth, most of the company’s profit comes from its cloud platform, Amazon Web Services (AWS). Also, its latest source of profits – selling ads on its platform – should only be minimally affected by legal setbacks. As a result, the company’s legal difficulties may not have as much of an impact on its earnings as some might anticipate.
Moreover, Amazon stock is trading at a more reasonable valuation than in the past. Due to the struggles of Amazon stock over the past year, its price-earnings (PE) ratio has fallen out of the stratosphere. On a forward basis, AMZN’s PE ratio is now about 50.8 . With analysts, on average, predicting that AMZN’s profits will rise 35.6% this year and 40.1% in fiscal 2020, AMZN stock should continue to attract many buyers.
Prime Day Will Also Be a Positive Catalyst for Amazon Stock
Further, investor attention remains focused not on courts, but on Amazon Prime Day. Prime Day will begin on July 15 and run for 48 hours. No research firm has released an estimate for Prime Day sales. However, in 2018, the event brought in $4.2 billion of revenue , coming in 74% higher than Prime Day in 2017.
AMZN is offering more discounts this year than in previous years, and it will hire celebrities to promote the event.
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 1,861.08.
The projected upper bound is: 2,071.87.
The projected lower bound is: 1,906.24.
The projected closing price is: 1,989.05.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 95.6948. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 16 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 70.57. 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 buy 24 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 207.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 13 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 buy 20 period(s) ago.
Rex Takasugi – TD Profile
AMAZON COM closed up 35.980 at 1,988.300. Volume was 5% above average (neutral) and Bollinger Bands were 27% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,925.30 1,874.46 1,745.42
Volatility: 19 29 46
Volume: 2,803,571 3,957,812 5,481,318
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 13.9% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 14 periods. Our momentum oscillator is currently indicating that AMZN.O is currently in an overbought condition.