Amazon (AMZN) has had a slew of positive headlines amid the usual whirlwind of AMZN news. A quick look at some recent highlights:
- New details were released about the coming Amazon smartphone.
- Bernstein analysts just said a broader rollout of same- and next-day grocery delivery service Amazon Fresh could be “highly profitable.”
- And yesterday, AMZN took a direct swing at eBay (EBAY) with the introduction of “Login and Pay with Amazon.”
On top of that, AMZN was enjoying some technical bullishness, forming a cup-and-handle pattern last week, making AMZN stock poised for a breakout.
Congress managed to ruin that one, though.
The AMZN stock chart has taken a hit, with Amazon stock suffering a 6% selloff during the past five trading days and breaking through its 20-day moving average around $310.
The damage AMZN sustained was double that done to the broader S&P 500 over the same time period, with Monday making for the first day in a month that Amazon stock showed relative weakness to the broader market.
Now, Amazon stock is hovering just above its 50-day moving average. While that should provide AMZN with some support, it’s hardly a guarantee. The broader market continues to display weakness in the face of the continued government shutdown, and the debt ceiling crisis remains on the horizon.
The bottom line: The wind is simply not at your back.
If Amazon stock doesn’t use its 50-day moving average as support, that’s a bad sign for AMZN investors.
Beyond watching what goes on in Washington, AMZN stock investors should also keep a close eye on Amazon earnings, which will be released on Oct. 25.
Well, OK … not Amazon earnings, per se. AMZN stock investors usually shrug off actual EPS results, which have finished in the red two out of the past four quarters and missed estimates in four of the past five. Right now, Amazon is slated to post a third-quarter loss of 9 cents per share. Just three months ago, analysts were expecting 10 cents in profits.
No, what really matters is AMZN revenue. Investors have gotten used to strong sales growth, north of 20% per quarter from the company. Currently, Amazon stock analysts are expecting a 21.4% improvement over last year’s $13.81 billion in revenue.
That number will be vital to Amazon stock in its bid to regain some upward momentum. If sales disappoint, AMZN could base around its 50-day moving average of $300 for several months to come, or worse, it could breach the MA, meaning even more pain for Amazon.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.