High expectations may have left Amazon.com, Inc. (NASDAQ:AMZN) stock poised to fall

High expectations may have left Amazon.com, Inc. (NASDAQ:AMZN) stock poised to fall

High expectations may have left Amazon.com, Inc. (NASDAQ:AMZN) stock poised to fall

Certain numbers – especially those with lots of zeros – hold great significance for stock-market traders. Amazon (NASDAQ:AMZN) stock has teased the psychologically significant $2,000 hurdle by touching it several times since the summer of 2018. But each and every time, Amazon stock retreated not long after reaching that number.

Consequently, investors will be examining  Amazon’s fourth-quarter earnings report, due to be unveiled on Jan. 30, with eager anticipation.

It will be interesting to see if e-commerce’s strong holiday season will translate to a bumper crop of profits for Amazon and its shareholders.

A Prosperous Holiday for E-commerce

It’s been well documented that the 2019 holiday season was very successful and profitable – but that online retailers, not brick-and-mortar stores. obtained the lion’s share of the proceeds.  Moreover, I probably shouldn’t bother using the plural term “online retailers” since everybody knows full well that Amazon is leaps and bounds ahead of its peers; in America at least, no other online retailer comes close in terms of size, scope, market share, revenue generation, and brand-name recognition.

How strong were e-commerce sales during the holidays? I’ll let the numbers do the talking: according to the National Retail Federation, 2019 marked the fourth consecutive year of double-digit-percentage growth in online and non-store sales. The forecast for 2019 had been for growth between 11% and 14%, but the actual sales jumped 14.6% or $167.8 billion.

Personally, I tend to view this as a mixed blessing for Amazon stock. Everybody already knows that e-commerce had a blockbuster holiday season, and they’re fully aware that Amazon was largely responsible for that. Therefore, it could be argued that ultra-high expectations could set the company and the owners of Amazon stock up for disappointment when the company’s earnings figures are released.

The Experts Weigh in on Amazon’s Earnings

Even as we look ahead, let’s not forget the recent past; Amazon’s Q3 earnings weren’t exactly stellar. Specifically, analysts, on average, had expected the company’s earnings per share to come in at  $4.59, while the actual result was $4.23.  That was way below the EPS of $5.75 that the company posted for the same period a year earlier.

The earnings miss could be attributed to Amazon’s extreme spending habits, as the company spent a great deal on implementing and promoting its one-day shipping program. In fact, Amazon managed to spend a whopping $9.6 billion on shipping in Q3, representing a 46% year-over-year increase.

So, did the massive spending pay off in Q4, and will e-commerce’s outstanding holiday season push AMZN stock beyond the key $2,000 price point? A couple of analysts from large banks seem to think so. Bank of America analyst Justin Post, for one, recently upped his price target on Amazon stock from $2,160 to $2,330 while reiterating his “buy” rating on the shares.

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 1,822.47.

The projected upper bound is: 1,947.57.

The projected lower bound is: 1,831.32.

The projected closing price is: 1,889.45.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 1 white candles and 9 black candles for a net of 8 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black 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 60.9343. This is not an overbought or oversold reading. The last signal was a buy 3 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 58.76. 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 12 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 39. This is not a topping or bottoming area. The last signal was a sell 9 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 sell 5 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed down -4.540 at 1,887.460. Volume was 3% above average (neutral) and Bollinger Bands were 6% wider than normal.

Open     High      Low     Close     Volume___
1,896.0901,902.5001,883.3401,887.460 3,216,257
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,882.11 1,808.18 1,833.25
Volatility: 16 20 24
Volume: 3,225,358 3,134,192 3,457,558

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 3.0% 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 volume flowing into and out of AMZN.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AMZN.O and have had this outlook for the last 21 periods.

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