Successful stock trading requires absorption of hard technical data, to go beyond what the perceived trend is. Advanced trading software can help in technical analysis, but the opinion of experienced analysts also matter.

Amazon's Growth Has Been Tremendous

With Amazon ($AMZN) shares having grown a massive 60% since the year began, it isn't surprising that analysts have a bullish perspective heading into the new year. This justifiable optimism has caused Goldman Sachs to reiterate its Buy rating and raise the price target of the stock to $1,450.00. Analysts are also spurring on Amazon to enter the non-ecommerce markets. Analysts from Cowen &Co. recommend Amazon purchase Rite Aid Corporation ($RAD) to enter the pharmacy business.
Experienced analyst Justin Kuepper analyzes this widespread optimism in order to come to an objective conclusion regarding Amazon stock.

  • Amazon's financial results continue to be impressive, with Q3 revenue posting a 33.7% rise to $43.74 billion.
  • That resulted in consensus estimates being beaten by a significant $1.6 billion.
  • The company's net income was 52 cents per share, which overcame consensus estimates by a significant 49 cents per share.

The "Cyber Week" (a new term coined as a result of the holiday offers and deals lasting for more than just the Cyber Monday) is seeing amazing holiday sales, which could result in further improvement in Q4 financial results for Amazon. That could further strengthen the ecommerce giant's prospects into 2018.

An Objective Analysis of Amazon Stock

To get the true picture of the stock though, it is important to look at an objective chart such as the one provided in Investopedia:

The above chart helps in a technical analysis of the $AMZN stock. Analysts believe the stock is in conditions that can be considered overbought. Looking at the RSI (relative strength index), $AMZN stock is at 77.53 which is squarely in overbought territory. Since late October, the MACD (moving average convergence divergence) has also run out of momentum. Kuepper also sees a bearish engulfing in the most recent candlestick chart. That could indicate that the recent rally of the stock could be ending in the near term at least.

Kuepper advises that traders must be on the lookout for Amazon to retest R1 support at $1,168.59 in the near term. If these levels break down, there could be a move back to the reaction highs somewhere around $1,080.00. If the rally continues though, the stock could show resistance at the $1,231.90. If a breakout could occur from these levels, the stock could touch further all-time highs. But analysts warn that at such levels, the overbought conditions of the stock could be further aggravated.

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