(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Amazon.com Inc's (AMZN) stock has posted meteoric gains in the past decade, rising by 35-fold. But 2018 is different. The stock has already fallen by 15% from its September highs. Now, technical analysis suggests the stock is facing a decline of an additional 6%. Should that happen, the stock would be 21% off its highs and in a bear market. The last time the stock fell into a bear market was in February of 2016, when it dropped by 30% from its highs, then quickly rebounded.

The company is expected to report third-quarter results on Thursday after the close of trading. Analysts are looking for the company to deliver strong earnings and revenue growth. But Amazon has a history of big beats or big misses when it comes to earnings estimates

AMZN Chart

AMZN data by YCharts

More Declines Ahead

The chart shows that the stock has been trending lower since early September. The shares are now trading below technical support at a price of around $1,760. It suggests that the shares may continue to fall to their next level of support at $1620 from its current price of approximately $1,740 around noon on October 23. 

Momentum Leaving 

Another bearish indicator is that the relative strength index (RSI) has been trending lower since reaching overbought conditions in late January. Since that time the RSI has been steadily trending lower despite the stock price continuing to rise, a bearish divergence, suggesting momentum is leaving the stock. Additionally, the stock has been falling on greater levels of volume, a sign that the number of sellers is increasing. 

Big Beat or Big Miss

Analysts are forecasting the company will report earnings of $3.09 per share up from $0.52 last year. Earnings estimates for this quarter have risen by 80% since July.

Amazon has easily beat estimates for the past four quarters. During the second quarter, Amazon reported earnings that were nearly double estimates. But it was in the second quarter of 2017 that Amazon reported results that were 75% below expectations. This has created a broad band of uncertainty among stock investors.

Revenue is forecast to climb 30% to $57.03 billion. That estimate is down about 2% since July. 

AMZN Quarterly EPS Estimates Chart

Amazon has a lot riding on these upcoming results as investors focus heavily on whether the e-commerce giant can keep expanding rapidly, especially on the revenue side. Fear is already rampant among investors due to volatility and upheaval in the broader stock market. Any small piece of bad news from Amazon could send the stock falling further.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.