By James Hyerczyk
Commodity Trading Advisor
Amazon.com (AMZN) reports earnings after the close on Thursday. The online retail giant is expected to post higher revenue but lower profits. Kindle tablet sales along with a general increase in e-commerce sales is expected to boost revenues while investment in operation expansion is being blamed for the drag on short-term profits.
Investors will be most interested in the company’s profit margins due to the higher operating expenses from the expansion of its sales centers. Additionally, they will be watching for any weakness in Kindle sales.
Analysts are looking for earnings of 7 cents per share on average, compared with 44 cents a share for the same period last year.
Technically, Amazon is in an uptrend on the daily chart. Although the stock corrected substantially from it late March top at $209.85, the low at $183.65 did not take out a swing bottom, keeping the main trend intact.
Now that a range has been established between $209.85 and $183.65, traders can look for the first target today to be the 50% level at $196.75. The main upside target is a resistance cluster created by a combination of Gann angles and the Fibonacci retracement level. The uptrending Gann angle is at $199.65. The downtrending Gann angle lands at $199.35 and the 61.8% retracement price is at $199.84. This configuration could draw Amazon up toward the $200 price level.
On Wednesday, Amazon gapped higher on the heels of a strong earnings report from Apple Inc. (AAPL). This action put the stock on the bullish side of an uptrending Gann angle at $191.65. This angle should provide the support today. A break through this level will mean that insiders know something about the earnings report that analysts aren’t picking up.
Look for a bias to the upside today although weakness in the NASDAQ stock index because of profit-taking following Wednesday’s powerful rally could encourage some selling ahead of the earnings report.
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