MW Here's the big barrier Amazon stock must overcome to reach fresh highs
By Jamie Chisholm
There is a fundamental reason why the shares have been rebuffed at the $200 mark
As another Federal Reserve decision looms and the sturm und drang of American politics buffets markets, it can be easy to forget that stocks are beholden, albeit with fluctuating degrees, to company-specific fundamentals.
The action of late in Amazon.com shares $(AMZN)$ is testament to that. A very-well received earnings report from the online marketplace and cloud computing company saw its shares jump 6.2% on Friday.
But yet again, after numerous flirtations with $200 during the session, the stock failed to close above that milestone. Cue much unhappiness among the retail traders of online trading forum wallstreetbets.
One poster wrote: "That $200 dollar ceiling tho. Titanium". Another posted: "AMZN 200 invisible wall, let me through to Narnia NOW!!!"
The frustration is nothing new. As the chart below from Bespoke Investment shows, for several days at the end of July, the $200 barrier also repelled Amazon's bull run.
Now, it's quite common for big round numbers at different times to be ceiling and floor. But they also often ultimately prove flimsy in the face of determined momentum. And from a technical perspective chartists would have been salivating at the message sent by the Amazon.com share price, as it approached its top again after a dip and several weeks of consolidation.
However, there are more than technical factors at play here. The problem for Amazon.com bulls is that it appears founder Jeff Bezos is using the $200 level as the point at which he's looking to raise cash. A lot of cash.
"In March, it was reported that Amazon founder Jeff Bezos planned to sell up to 25 million shares of AMZN by the end of 2025. When AMZN kept unsuccessfully trying to break through $200 in July, we quickly found out why," says Bespoke.
Bespoke notes that insider transaction filings showed Bezos seemingly had a limit order to sell shares above $200. As the next chart shows, from July 2 to July 11, Bezos indeed dumped millions of shares a day at an average price just above $200.
"On July 11th, the last day of reported selling from Bezos, the stock no longer had enough buyers to keep up with Bezos' sell orders and eventually traded lower. Since then, there have been no more reported Bezos sales, and the stock price didn't get near $200 again...until today [Friday]," says Bespoke.
Bezos's sales in July amounted to over 8 million sales, meaning he's likely got a lot more of the 25 million supposedly left to be disposed of. Bespoke noted that on Friday some 80 million Amazon.com shares were traded but only about 5 million traded at $200 or higher, "so we'll see how many more shares he managed to unload when his next insider sales report gets filed."
"For now, it looks like $200 is going to remain stiff resistance until the Bezos shares clear," Bespoke concludes.
Markets
U.S. stock-index futures (ES00) (YM00) (NQ00) are higher early Monday as benchmark Treasury yields BX:TMUBMUSD10Y slip. The dollar index DXY is down, while oil prices (CL.1) rise and gold (GC00) is trading around $2,741 an ounce.
Key asset performance Last 5d 1m YTD 1y S&P 500 5728.8 -1.37% -0.39% 20.10% 31.44% Nasdaq Composite 18,239.92 -1.50% 0.56% 21.51% 35.33% 10-year Treasury 4.307 2.10 27.40 42.61 -34.23 Gold 2753.6 -0.04% 3.44% 32.91% 38.74% Oil 71.5 5.13% -7.49% 0.24% -11.64% Data: MarketWatch. Treasury yields change expressed in basis points
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The buzz
U.S. economic data due on Monday include factory orders for September at 10:00 a.m. Eastern.
Apple shares $(AAPL)$ are down fractionally after it was revealed that Warren Buffett's Berkshire Hathaway $(BRK.A)$ $(BRK.B)$ had sold 25% more of its holding in the iPhone maker during the third quarter.
Oil prices (CL.1) (BRN00) are higher after OPEC and allies agreed to extend output cuts through to the end of December.
The dollar $(EURUSD.FOREX)$ $(GBPUSD.FOREX)$ $(USDJPY.FOREX)$ and Treasury yields BX:TMUBMUSD10Y - which have rallied of late on expectations of a Donald Trump victory in the U.S. election - are lower after a poll over the weekend indicated Democratic candidate Kamala Harris may win the state of Iowa.
Companies reporting earnings after the close include Palantir Technologies $(PLTR)$ and NXP Semiconductors $(NXPI)$.
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The chart
The latest Conference Board poll of consumers found that their confidence that stock prices will rise in the next year has hit a record high. It's the kind of optimism that can get contrarians very twitchy.
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-Jamie Chisholm
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November 04, 2024 06:25 ET (11:25 GMT)
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