Notice the difference in relative strength between the bearish period outlined above and the bullish period we are in now. During the bearish period, AMZN underperformed the major index. I prefer to own stocks that are outperforming the major index. I think that relative strength is bullish for AMZN. In May 2023 you can also see that the 30-week EMA is starting to trend upwards as well.
I want to own stocks that are above an upward-trending 30-week EMA. This was not its characteristic during AMZN’s downtrend in which it lost 56%. Since May 2023 AMZN has stayed above its 30-week EMA and has made a series of higher highs and higher lows. Last week it had a big bullish candle on high volume.
- The trend changed from bearish to bullish in May 2023.
- Price action is bullish as it is above an upward-sloping 30-week EMA.
- Then AMZN continued to rally and closed above its 30-week EMA in April 2023 and stayed above that EMA.
- The second way PPO shows momentum is when the black PPO line is above the zero or centerline of the PPO chart which I consider to be a long-term momentum indication.
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Amazon Stock Forecast
The company also provided an operating income guidance of $5.5 billion to $8.5 billion, which potentially triples the $2.5 billion earned in last year’s third quarter. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. In December 2021 AMZN closed below the 30-week EMA and essentially stayed below that EMA for the next 16 months or so.
Should I Buy Amazon.com Stock? AMZN Pros and Cons Explained
Nevertheless, it is possible to use historical data and current information to figure out where a company is likely to be at some point in the future. That type of volatility is typical of tech stocks. If you prefer assets with more stability, top consumer staple stocks may be a better fit. Here’s a look https://forexhero.info/ at each company’s cash position through the end of the most recent quarter. Of course (and as always), bear in mind that something dramatic could change in the meantime, and no stock moves from one price to another in a straight line. But what will the stock arguably be worth five years from now?
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When the black PPO line crosses below the red signal line that shows short-term bearish momentum. The second way PPO shows momentum is when the black PPO line is above the zero or centerline of the PPO chart which I consider to be a long-term momentum indication. Currently, the black PPO line is at 6.243, well above the zero or centerline. You can see why this is considered a long-term momentum indication. PPO does not cross above or below the zero or centerline that often.
Stock Price Targets
Both short and long-term price momentum is bullish. AMZN shares have been under institutional investor accumulation which I view as bullish. Finally, AMZN is outperforming the S&P 500 index which is bullish. When I buy a stock, I want to see bullish momentum and the Percentage Price Oscillator (PPO) shown in the top pane of Chart 1 assists me in that effort.
To get a handle on that, you have to take a step back and figure out what’s working for and against the company, and how those things might change between now and then. Access our top stock picks, proprietary research reports, stock screeners and more. There are three megatrends, however, that matter more than anything else at this time. From healthcare to retail, finance to education…
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The 30-week EMA followed the series of lower lows and lower highs that AMZN made from November 2021 to its low price in January 2023 at $81.43. The company is not a true retailer nor a pure-play manufacturer but in the business of connecting consumers and merchants together. The website was first created as a means of selling books at a discount but it has since grown to include most verticals in the retail sector. A few of the products the company does manufacture are the Kindle and Fire Tablets, Fire TVs, and smart home devices like Echo. Echo is powered by an AI personality named Alexa which can take vocal commands from its users. That’s why all investing has some element of risk; we never know for sure what awaits stocks or their underlying companies.
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Costco reports having 31 million total square feet of distribution and logistics facilities during fiscal 2021, but it’s unclear how much of that is devoted to e-commerce. The primary concern for the retail industry entering the holiday quarter was supply. Top retailers Costco Wholesale (COST 0.48%), Target (TGT 0.76%), and Walmart (WMT 0.09%) have handled this quite well, with inventories much higher than last year. Create a list of the investments you want to track.
Notice in January 2022, the black PPO line crossed below the zero or centerline and stayed that way during the entire bearish period. Price action, the 30-week EMA, and PPO were all telling the investor to not be long AMZN during that period. PPO is confirming the bullish price action and the bullish 30-week EMA trend. The volume also confirms the bullish trend in AMZN. During the bearish trend, all the high-volume bars were in red showing selling activity by institutional investors. Since the low in January 2023, with one exception, the biggest bars are black bars showing institutional investors are accumulating shares of AMZN.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Price action is bullish as it is above an upward-sloping 30-week EMA. The bullish head and shoulders chart pattern indicates a potential price target that is 20% higher than current prices.
Lower lows and lower highs are the definition of a bearish trend and the price action and the 30-week EMA of AMZN captured that bearish trend well. That is why I avoid owning stocks that are below a downward-sloping 30-week EMA. The trend is not in my favor under those conditions.
The bottom pane of Chart 1 shows the ratio of AMZN to the S&P 500 index. When the black is rising that means AMZN is outperforming the S&P 500 index. When the black line is falling, that means AMZN is underperforming the S&P 500 index.
The first way is when the black PPO line crosses above the red signal line. This simple crossover technique shows that momentum is bullish in the short term. I say short term because you can see that this crossover happens often.
That higher low also allows the 30-week EMA to flatten out which it must do before it can start an upward sloping trajectory. Then AMZN continued to rally and closed above its 30-week EMA in April 2023 and stayed above that EMA. This was different behavior from previous closes above the 30-week EMA cm trading review back in March 2022 and July and August of 2022. In those instances, AMZN couldn’t stay above the 30-week EMA indicating that the bearish trend was still in place. In May 2023, AMZN closed above the high it made in January 2023 at $114.00 officially making a higher high after a previous higher low.