Amazon stock chart shows ‘breakout’ rally ahead of earnings

Shares of Inc. rose on Tuesday, enough to suggest a “breakout” technical rally ahead of the e-commerce giant’s post-close earnings report.

Janney’s technical strategist Dan Wantrobski said that with the “bullish breakout” he now sees potential for AMZN stock,
back up to at least $3,800 on an interim basis.

FactSet, MarketWatch

After surging from March lows as investors viewed Amazon as a beneficiary of COVID-19-related lockdown measures, the stock had been consolidating in an increasingly narrow range in recent months.

This range, in the form of what many Wall Street chart watchers call a “pennant” pattern, is defined by a falling trend line at the top of the range and an increasing trend line at the bottom. . Many technicians see pennants as continuation patterns, meaning they tend to resolve in the direction of the trend that preceded them.

On Tuesday, Amazon’s stock traded above the pennant’s high as it opened at $3,380.00, above Monday’s close of $3,342.88. This would suggest that the consolidation was over and the stock may have started a new uptrend.

The stock rose 1.8% by midday, putting it on track for the highest close since Oct. 13.

“We believe these actions bode well for further gains to come and recommend investors to hold their course above the $3,100-$3,200 support going forward,” Wantrobski wrote in a note to the media. clients.

Amazon is expected to report fourth quarter results after Tuesday’s closing bell, with analysts polled by FactSet expecting, on average, net profit of more than $6.3 billion and revenue approaching $120 billion. dollars.

Don’t miss: Amazon Revenue Snapshot: Prime Day and the holidays mean Amazon will add to its most profitable year.

Wantrobski said a weekly chart also suggests a longer-term bullish outlook, as the stock had already broken out of a larger prior formation last April, before the current apparent breakout.

FactSet, MarketWatch

He said Amazon’s stock also showed “upside reversal potential” against the S&P 500 index.

FactSet, MarketWatch

“[T]this implies that the stock could begin to outperform broader markets again on a relative basis,” Wantrobski wrote.

Amazon’s stock is up 13.3% over the past three months, but has underperformed the S&P 500’s SPX,
Gain of 16.0% over the same period. Over the past 12 months, however, Amazon shares have jumped 69.4%, beating the S&P 500’s 19.1% gain.

Karen J. Nelson