The Confident Investor

With all other things going on, Amazon.com, Inc. [stckqut]AMZN[/stckqut] has been on a run — rising 17.34 percent in just three months. It looks like traders are happy with the stock. On the other side, analysts now consider Amazon a buy, and a technical analysis of the stock is setting somewhat neutral outlook for now.

Let’s talk about the gap between analyst price targets for the next 12 months and Amazon’s current share price. Normally this spread should be in positive territory, indicating that analysts expect an investment’s value to increase over time.  The median target of analyst views collected by Yahoo Finance was as much as $99.22 below AMZN’s recent stock price. That’s the optimistic view from Wall Street.

The stock has actually made strong gains in the past year, as the company has gathered a 39.29% return in the past twelve months. But even with this move, there is still plenty of room for the company to come back from a longer term perspective, and especially if we look to recent lows for the company as well.

Finally, from a technical perspective, there’s a strong possibility that the stock could enter into a new bull market after finding strong support between $985.16 and $990.47. In terms of pullbacks, $999.87 level is the first resistance point. Technical analysis can help recognize key technical price levels in the stock. Investors can use these support and resistance levels to refine their entries and exits from stocks.

Amazon.com’s price is pointing towards neither exit nor entry barriers, according to the Relative Strength Index (RSI). RSI measures the speed and change of a stock price to warn investors when a stock’s momentum has carried it too far. An RSI reading above 80 indicates that a stock is overbought while anything below 20 is oversold.

The Stochastic %K for Amazon is 94.6. The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. Considering the most traditional settings for the oscillator, 20 is typically considered the oversold threshold and 80 is considered the overbought threshold. However, the levels are adjustable to fit security characteristics and analytical needs. Readings above 80 indicate a security is trading near the top of its high-low range; readings below 20 indicate the security is trading near the bottom of its high-low range.

14-day Williams %R for Amazon moved to around 5.53. The interpretation of Williams %R is very similar to that of the stochastic oscillator, except that the stochastic oscillator has internal smoothing. The oscillator ranges from 0 to -100. No matter how fast a security advances or declines, Williams %R will always fluctuate within this range. Overbought and oversold levels can be used to identify unsustainable price extremes. Simply put, readings in the range of 80% to 100% indicate that the security is oversold while readings in the 0% to 20% range suggest it is overbought.

Source: Inspecting more closely technicals of Amazon.com, Inc. (AMZN)