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Trends & Analysis
News

Crude oil spikes on US inventories report

News

Does Apple have more room to run?

News

Gold spikes to new highs on Fed remarks

News

GBP/USD price may correct lower

News

Goldman Sachs’ stock surges on upbeat Q2

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Caution ahead of Netflix’s earnings?

Asset Watch

Is Amazon approaching a major move?

Tuesday July 2, 2024

As the bearish S&P 500 seasonality concludes and a historically more optimistic July approaches, investors will likely turn their attention to the Q2 earnings season. And with Bank of America expecting Amazon to outperform, its team of analysts increased their price target from $210 to $220 on Jun. 26. They wrote:
Amazon’s “delivery speed [has] dramatically improved, with nearly 25% of estimated units now delivered same-or-next day. However, despite significant efficiency improvement in 2023, all five logistics utilization metrics that we track (such as units per square feet) remain below 2018 levels, suggesting more runway ahead for efficiency gains from here… driving higher retail margins.”
If Amazon increases its delivery efficiencies in 2024 and moves closer to the 2018 peaks, realised profits will outperform analysts’ expectations, and the stock should benefit.
Yet, while Amazon broke out to a new record high last week, a make-or-break moment could be on the horizon.

Amazon’s July and November 2021 highs were $188.65 and $188.11, and the stock closed at $193.25 on Jun. 28. As a result, it needs to hold above the $188 area to confirm the breakout.

The 20-week moving average is also a key support level, as the stock bounced near it in April and May 2024. And with the metric ending last week at $181.15, it will keep rising the longer Amazon trades above it.

The moral of the story is that Amazon’s 20-week MA will eventually collide with the $188 breakout area, and the stock will either break down like in September/October 2023 or soar toward Bank of America’s $220 target. Consequently, you should monitor the $188 area, and if it holds, a long position is justified.

So, will Amazon mirror Apple and confirm the breakout, or should you remain cautious in the weeks ahead?


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