The online shopping giant set its all-time intraday high of $3,773.08 on July 13 and this day was a key reversal day with the close of $3,677.36, below the July 12 low of $3,696.79.
Today there was a report by the Motley Fool that indicated that Amazon is raising the cost of its ad prices. This will result in increased profits in upcoming quarters.
Amazon.com is not cheap. Its p/e ratio is 60.35% and the company does not pay a dividend. Amazon has beaten earnings-per-share estimates in five consecutive quarters.
The Daily Chart for Amazon.com
The daily chart for Amazon shows the stock above a golden cross that was challenged between April 15 and May 5. Today the 50-day simple moving average is $3,435.96 and the 200-day simple moving average at $3,304.10. Monday’s volatile day was between these averages.
There are five horizontal lines. The top line is the semiannual risky level at $3,700.62. This line was tested as the price to book profits between July 7 and July 26. Shares of Amazon broke below the next two horizontal lines on a negative reaction to earnings reported after close on July 29. These lines are the quarterly pivot at $3,589.11 and the monthly pivot at $3,363.74.
The 200-day simple moving average was tested as a buying opportunity at $3,273.95 on August 16. This moving average was nearly tested at $3,304.10 on Monday, September 20.
The Weekly Chart for Amazon.com
The weekly chart for Amazon is neutral with the stock below its five-week modified moving average at $3,405.34. The stock is well above its 200-week simple moving average or reversion to the mean at $2,255.94. The 12x3x3 weekly slow stochastic reading is rising at 40.81.
Trading Strategy: Buy shares of Amazon on weakness to its 200-day simple moving average at $3,304.04. Reduce holdings on strength to its quarterly pivot at $3,589.11.