Amazon.com, Inc. (AMZN) reports earnings after the closing bell on Thursday, Oct. 25. The stock closed Wednesday, Oct. 24, at $1,664.20, which is right on the 200-day simple moving average. Following a correction of 18.8% from its all-time high of $2,050.50 set on Sept. 4, the stock remains up 42.3% year to date and in bull market territory at 31.5% above its 2018 low of $1,265.93 set on Feb. 9.
Analysts expect the company I call the "United States of Amazon" to report earnings per share of $3.29 to $3.44 in its upcoming earnings release. In anticipation of better-than-expected earnings, the stock opened back above $1,700 this morning, as the company should top $1 billion in profits for the fourth consecutive quarter. Amazon Web Services remains the global cloud computing leader. Advertising dollars should continue to rise. Consumers are shopping at Whole Foods supermarkets, and Amazon Prime memberships continue to grow.
The daily chart for Amazon
The daily chart for Amazon shows that the stock began 2018 above a "golden cross," which justified a core long position since March 2015. Remember that a "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. One guideline is that investors should buy weakness to the 200-day simple moving average, which was doable on Oct. 24 at $1,664.42.
From top to bottom, the three horizontal lines on the chart indicate important levels. At the top is my monthly risky level of $2,027.22. Then there's my quarterly pivot of $1,804.55, last tested on Oct. 22. The third horizontal line is my semiannual value level of $1,546.97.
The weekly chart for Amazon
The weekly chart for Amazon is negative, with the stock below its five-week modified moving average of $1,824.30 and well above its 200-week simple moving average of $915.60, which is the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 43.49 this week, down from 56.59 on Oct. 19.
Investors should buy Amazon shares on weakness to my semiannual value level of $1,546.97 and reduce holdings on strength to my monthly risky level of $2,027.22. My semiannual pivot at $1,804.55 should remain a magnet.