Last week we saw Amazon’s peers and competitors, $Microsoft(MSFT)$ and $Alphabet(GOOGL)$ reported impressive quarterly results. Both have cited AI and stronger overall cloud demand. So this has also boosted the market confidence about the Amazon’s upcoming report, this will give investors the optimism.
Investors are eagerly expecting whether $Amazon.com(AMZN)$ earnings will help to catalyse the stock price like how the previous earnings have gave. We have seen Amazon surprised with upside EPS in four out of the last five quarters.
As seen in the implied straddle, we are seeing a pretty decent price effect of more than 5% in the last 3 past earnings, when Amazon report a better-than-expected revenue and earnings, so we could be looking at least 5-6% rise in price post earnings this time.
Revenue expectations have also been consistently exceeded in all of the past five quarters. It is expected to be a 12% increase in sales to $142.6 billion, with earnings per share predicted to rise by 170% to 84 cents per share. Additionally, Amazon's cloud-computing division, AWS, is expected to see a 15% year over year sales growth, giving it two consecutive quarters of faster growth.
In this article we want to see how we can plan our trade for Amazon (AMZN) before it reports its quarterly result on 30 April 2024 after the market close. I will be using MACD with buying/selling strength and MACD and KDJ.
Amazon Trade Slight Below 50-day MA Period
If we look at how Amazon have been trading over the past few weeks, we could see that Amazon was trading above the 50-day MA period quite comfortably, but it experienced a dip near end of last week when 2 of its competitors reported quite good earnings.
So does it signal that the market shares in AI and Cloud demand have shifted from Amazon? Or could it be due to the investors sentiment shifting? We can see more indicators to see how we can trade Amazon prior to their earnings on 30 April 2024.
Amazon Need To See More Demand (Buying) Of Its Stock
As mentioned above, Amazon is trading below 50-day period, and this could be due to the disappearing of demand from its buyer, we could see more selling, as the strength build up over the last few days of last week.
If we look closely, we could see that MACD is also declining despite Big tech powering up the NASDAQ, closing above 2% last week. So does it mean that the demand for AI and cloud has identified the winners?
Is there any more potential opportunity for Amazon?
Amazon Declining Wedge Or Triangle Signal Reversal If Demand Pick Up?
If we look at how Amazon is trading over the last 2 weeks, we could see that Amazon is forming a declining wedge or rather triangle.
In order to have a bullish reversal, we need to see more buying demand pick up, using KDJ, we could see that there is no signs of strong buying sentiment, but we saw a BUY signal appearing.
If we could see the same pattern forming with K values increasing, we could go into Amazon today (29 April) to take advantage of any potential price effect upside after its earnings?
Summary
I personally looking at 5-6% price effect upside after its earnings for Amazon, because enterprises (medium or larger) are building on AWS, and they are also partnering with lots of AI companies making their AI services available for deployment on the AWS platform.
So this might make these enterprises to have most if not all of their services in one location, and they could build redundancy on top of these as well. I think we could take advantage by placing a trade on Amazon today (29 April)
Appreciate if you could share your thoughts in the comment section whether you think Amazon could beat estimate and give at least 5% upside.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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