Amazon stock’s RSI moved to 70.3.
Keeping in mind that Amazon.com, Inc. (AMZN) stock has increased over 70% during the year, there is a fear that a sell-off may begin on valuation concerns. Furthermore, Amazon Stock reached its all-time high of $580.57 followed by the company’s positive results for the second quarter of fiscal year 2015.
On the basis of a large number of bullish comments by sell-side firms and increasing investor confidence, the stock’s Relative Strength Index (RSI) has shifted to overbought readings i.e. 70.3. Therefore, I believe that the stock’s bullish momentum might take a pause in the near -term.
The general theme looks bullish beyond the significant intermediate to long-term averages (50, 100 & 200 DMAs). On the other hand, a latest upper body reaction of an intermediate channel followed by a price gap (July 24th) at Overbought regular momentum readings cast are not sure about the protraction of bullish momentum.
This was actually the 3rd price gap recorded followed by a bottom registered in October last year, giving clues that this might be an exhaustion gap. Any upcoming pressure less than $510.57 can elevate the threat for weakness to $467.28, where it might ample the 38.2% Fibonacci retracement of the October 2013 to July 2015 meeting ($284 to $580.57). Instant resistance is placed at nearly $542.74. A break above $580.57 is needed to revive the bullish momentum. So, Lock profits and wait for new signals!
Recently, the company has been targeted in an article by the New York Times regarding the company’s environment. The articles elaborates that the company pushed its employees to work more than 80 hours per week. In reply, CEO, Jeff Bezos sent a memo to employees stating that the report doesn’t define the company he knows and if it’s true then it should immediately be forwarded to me or HR.
Talking about the sell-side analysts having coverage on Amazon stock, 38 recommend a Buy, 9 rate it a Hold, and only one give it a Sell rating. The twelve-month consensus stock price target is $652.07. The stock is down by 0.39% and stood at $532.92 on Wednesday market close.
Amazon.com, Inc. shares increased drastically by 313%, against 95% for the S&5 500 index during the last 5 years. Due to the company loss in 2014, it has no anticipated P/E ratio, according to Amazon stocks updates. Amazon shares are now priced at 332.20x current year’s estimated earnings, making them comparatively expensive as compared to the 19.06x of industry earnings multiple.
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