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Amazon share price news: prices could continue to rise to all-time highs in February

By David Becker

Amazon news today: the technicals are messy, but if prices close above $2,020, a breakout may occur

Amazon surged more than 10 per cent on the last Friday of January, following better than expected financial results reported after the bell last Thursday. The fundamentals of the company are running on all cylinders, but the technicals point to a potential pullback. Despite rallying 7.9 per cent last week, Amazon has yet to make a 52-week high and trails the one-year returns of many of the other large-cap technology companies.

Historically February has been a difficult month for Amazon. Over the past 20 years, the stock price has been up 50 per cent of the time and the average loss has been -4.7 per cent

Amazon news today: the financial results were off the charts

According to the Amazon share price news, the company hit the cover off the ball. Amazon reported Q1 revenue that increased nearly 21 per cent to $87.4 billion (£67.1bn, €79bn), beating analyst estimates by $1.35 billion. The numbers exceeded the company's guidance range of $80.0 billion to $86.5 billion. Earnings per share of $6.47 also beat expectations of only $3.96. Operating income for Q4 increased 3 per cent year over year to $3.9 billion, above the company's guidance of $1.2 billion to $2.9 billion.

Amazon stock analysis: the technicals are mixed

Amazon’s share prices surged last week, rising 7.9 per cent, and testing resistance levels. The stock price formed a double top from September 2018 and July 2019. Prices were unable to close above the weekly high close of 2012.

On a weekly basis, positive momentum is accelerating, which is a good sign for further price gains. The RSI (relative strength index) broke out above the July highs. The current weekly reading on the RSI is 68, which is just below the overbought trigger level of 70.

The increase in accelerating positive momentum is confirmed by the fast stochastics, which generated a crossover buy signal. The only caveat is that the fast stochastic is printing a reading of 82, above the overbought trigger level of 80, which could foreshadow a correction.

Medium-term momentum is also accelerating. The MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory, which points to higher prices.

The daily Amazon chart pattern is ugly. Prices surged higher but were unable to close at a 52-week high and closed near the lows of the session on the day they had better than expected earnings. Prices have a gap that they can fill which would push Amazon share price down to the January highs at $1,917.

Prices are also overbought. The RSI is printing a reading of 71, which is above the overbought trigger level of 70 and could foreshadow a correction. Medium-term momentum is positive as the MACD generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory, which points to higher prices.

Amazon share price trend: take away

Amazon’s current share price is hovering near resistance levels and will need to close over $2,020 for the price to official break out. The fundamentals point to higher prices, but the seasonals don’t.

The technicals are messy, but if prices close above $2,020, a breakout will occur, and prices will continue to rise to fresh all-time highs in February.

FURTHER READING: Amazon seeks patent for palm recognition technology

FURTHER READING: Amazon launches portable Echo device in India

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