Why Some Longer-Term Investors Are Now Concerned

AmazonAMZN
is no longer an exciting start-up operation even though a few Wall Streett analysts still like to think of it that way. In fact, the big online retailing outfit is taking on the look of maturity, not necessarily a bad look but definitely way beyond “exciting start-up.”

Amazon is in a downtrend on all the timeframes noted on the charts below. The stock is having a hard time making higher highs and seems to keep heading in the direction of down. It’s fascinating to see how WalmartWMT
— the company that Amazon took on so fiercely — is outperforming the Jeff Bezos wonder these days.

The effects of the Fed’s action on interest rates hikes is the most likely factor in Amazon’s slump. Since it costs more to borrow, that makes it tough to keep buying with the credit card. As fewer purchases are made, bottom lines for the online retailer are not as much fun as they used to be.

The Amazon daily price chart looks like this:

That late October sell-off took the price well below the May and June lows, not a good look to those holding on to the stock. Now, after a short rally in mid-November, it’s down again and challenging the 85 support area.

For shareholders, it’s unfortunate to see the price remain below both the down trending 50-day moving average (the blue line) and the down trending 200-day moving average (the red line).

Take a look at the Amazon weekly price chart:

The stock peaked at 188 in July, 2021 and after a rally back to just below that level in November, 2021, it’s been downhill ever since. This is a 51% drop in value from that peak to the present. You can see how the price has returned all the way back to the levels of the March, 2020 pandemic-scare sell-off.

The 50-week moving average is crossing over the 200-day moving average for a definite bearish look. The relative strength indicator (RSI, below the price chart) may be forming a positive divergence from the March, 2022 lows to the present.

The monthly price chart for Amazon is here:

It’s clear from this longer-term perspective that Amazon is back the March, 2020 dip and is now approaching the lows of late 2018. Price is now below the 50-month moving average which is no longer trending upward. The extraordinary period of growth for the company from 2008 to 2021 can be seen on this monthly chart, for sure. The 200-month moving average remains in the up mode.

For a different way of seeing it , here’s the Amazon point-and-figure chart:

The x’s represent upward price movement and the o’s represent downward price movement. The chart is already bearish and a drop to below the previous 86 support level would make it even more bearish, according to this point-and-figure type of analysis.

One more thing, here’s the Walmart weekly price chart, for comparison’s sake:

Note that, unlike the Amazon weekly price chart, the price here remains above both the up trending 50-week moving average and above the up trending 200-week moving average. Walmart’s stock is basically back to the level which it started at the beginning of 2022 — after a February/March rally and a big April/May sell-off.

Not investment advice. For educational purposes only.