Amazon.com (NASDAQ 🙂 has fallen sharply after the results were announced last Thursday. Although third-quarter sales and earnings were in line with expectations, weak sales of high-margin cloud services disappointed investors. Amazon Web Services sales came in at $20.5 billion, below estimates of $21.1 billion.
In other words, the cloud computing unit’s growth fell to 27.5%, well below analysts’ expectations of 32%, the slowest growth since the company began reporting the company’s financial statements, this section. In addition, Amazon provided a weak forecast, warning that fourth-quarter annual growth will drop 6% to 8%, and revenue will range between $140 billion and $148 billion, down from the $155.15 billion forecast.
Amazon’s problems are part of the challenge that big tech companies are facing after the economy has entered a technical recession and is heading into a full-blown recession that even politicians won’t be able to deny.
So is Amazon a buy after losing 48.25% since its all-time high in July 2021? Fundamental analysts think so. TipRanks provides an average price target based on 33 analysts of $141.31, which reflects a 36.65% profit from the current price of $103.41. However, the primary analyst goals fall within the 12-month time frame. They do not claim to know when their goal will be achieved. So even if they’re right, at some point in the next 12 months, they’re not necessarily claiming that the stock won’t go down first.
Now, let’s take a look at the technical approach.
Price completed another continuation type H&S. The high of the $40 pattern indicates a target of $65. If all the interest invested causes a chain reaction to another drop of 38.5%, the stock will have crossed another uptrend line from the January 2015 low.
The next big support might be the December 2018 low at $65. This is true. The H&S continuation pattern coincides with the December 2018 low, providing technical support for a new uptrend. However, if the build fails, the next support will be the rising trend line from the 2008 low, currently at the $30 level.
- Conservative traders should wait for the price to retest the neckline of the continuing H&S pattern and show continued resistance.
- Moderate traders should wait for a turn back for a closer entry if this is not confirmed.
- Enterprising traders can short sell at will, depending on their strategy.
Examples of short selling Amazon stock:
- Admission: $103
- Stop Loss: $108
- Risk: $5
- Target: $68
- Reward: $35
- Risk-reward ratio: 1:7
- Admission: $108
- Stop Loss: $110
- Risk: $2
- Target: $98
- Reward: $10
- Risk-reward ratio: 1:5
- Entry: $105 (after retesting at $108)
- Stop Loss: $110
- Risk: $5
- Target: $90
- Reward: $15
- Risk-reward ratio: 1:3
warning : The author has no place in the tools mentioned in this article.