New Potential Price Target for Amazon After U.S.-China Trade Deal
Amazon could be headed toward a lucrative opportunity for traders after the latest tariff update.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The deal to work toward a more detailed, more permanent trade agreement between the U.S. and China had been announced. I was well positioned. I had a good morning. Honestly, I cannot, and I am not complaining. I had planned to get long at least a few shares of Amazon AMZN ahead of the event in Switzerland on Friday.
Some readers know that I had a family emergency on Thursday night and that I never made it to work on Friday. I never even thought about work on Friday. That said, as tariffs came down sharply, e-commerce retailer Amazon, took off just as sharply. Is it too late to hop aboard this running train? The stock is up 7.8% from its Sunday close but is off of the highs. Let's take a look.
Reality
Tariffs had a significant impact on Amazon stock, as many of the goods sold on Amazon are manufactured in China. At 145%, the tariffs had made importing those goods all but prohibitive, and in most cases, there is no ready-made alternative supplier to go to. This impacted Amazon's third-party sellers as much if not more than it did the goods sold directly by the firm. Third-party selling is one of Amazon's retail businesses, though, and that impact completed the damage across the firm's site.
What Does the Chart Say?
Readers will see the double-bottom pattern of bullish reversal that we laid out a few weeks ago. By extending the pivot line to the right, we see that no breakout was even attempted until this past Friday. The most important items on this chart are the taking of the 50-day SMA on Thursday and the taking of the 200-day SMA on Monday morning. This should bring increased capital into the name as portfolio managers increase long-side exposure.
Relative strength is now quite robust without reaching technically overbought territory. As for the daily MACD, the histogram of the nine-day EMA has been positive for weeks. On top of that, the 12-day EMA is riding above the 26-day EMA, which is bullish, and has moved into positive territory in recent days. What we do need to see is for the 26-day EMA to also go positive. With all three MACD components above zero and with the 12-day line above the 26-day line, we'll have a truly bullish set-up.
That said, Monday morning's gap up opening was probably a little much. I am looking for AMZN to come in a little from here and present another opportunity for interested investors, hopefully at some point this week.
My Plan for AMZN
- Looking to initiate at or close to the 200-day SMA ($199.30)
- This is also our pivot
- Potential Target Price: $235
- Panic on the loss of the 50-day SMA ($190.20)
At the time of publication, Guilfoyle had no positions in any securities mentioned.
