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

Amazon.com Inc's (AMZN) stock is about 9% off its all-time highs of September 4 at $2,050. But now the stock is poised to fall even further based on technical analysis by perhaps another 5% and should that happen the stock could be down by as much as 15% from its highs. (For more, see also: Amazon’s Stock Faces More Declines Short Term.)

Amazon’s market capitalization hit $1 trillion in early September, and since then it has been all downhill. One sign of caution is that analysts have been shaving their revenue estimates for the current quarter and balance of the year since the middle of July. (For more, see also: Amazon Bulls Double Down Despite Shaved Forecasts.)

AMZN Chart

AMZN data by YCharts

Nearing Key Support

The technical chart shows that Amazon was increasing in a long-term rising wedge starting in March, which is a bearish reversal pattern. Now the stock is trading around technical support at $1,840. Should the stock fall below that level of technical support, then the stock could drop to its next level of technical support around $1,740. 

One sign that bullish momentum is leaving the stock is that the relative strength index (RSI) has been trending lower since peaking at overbought levels near 90 in January. The RSI has been trending lower since then and despite the stock making new highs this is a bearish divergence. 

Trimming Revenue 

Analysts have been trimming their revenue estimates for the company since the company reported second-quarter results in July. Forecasts are now looking for revenue in the quarter to rise to $57 billion down from $58 billion. 

The bigger problem is that revenue estimates for the balance of 2018 have declined as well, dropping by 1% while estimates for 2019 and 2020 have fallen by 1.2% and 1.8% since July. 

Big Earnings Growth

AMZN Annual EPS Estimates Chart

But momentum in Amazon can swing, although there are plenty of red flags on the revenue side. Analysts foresee strong earnings growth for the balance of 2018 through 2020. They estimate it will grow at a compounded annual growth rate of 102%. 

Amazon’s stock has moved lower in recent weeks, and should investors stay nervous about stocks, Amazon may continue to suffer.  But then again, with third-quarter results around the corner, a further decline may be short term. 

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.