Fundamental analysis makes the case for what stocks we should be buying. Good technical analysis helps tell us when.
As the “Magnificent 7” report numbers during this earnings reporting period, we’ll take a very brief, one-by-one look at each of these names in an attempt to help newer readers get a feel for how we pair Point & Figure technical analysis with our fundamental approach, which includes a focus on earnings momentum.
According to Yahoo Finance, the average earnings estimate for Amazon’s Q3 ending 9/30/2024 was $1.14 per share on revenues of $1.57 billion.
In actuality, Amazon reported $1.43 in earnings on revenues of $158.7 billion.
This was an upside surprise of 25.4%, roughly in line with the surprise beat rate of the last 3 quarters. Forward guidance was also raised – the good old triple beat.
How did the stock react? New all-time highs at $212.
As a reminder, in our style of analysis, Xs represent upward moves, columns of Os, down. In subsequent posts, we’ll get into details about box sizes (prices on the right axis) and numbers/letters you see within the charts. For now: Xs up, Os down.
So, is the stock now a bit extended in the short-term? Sure, but we view this as a significant breakout, the spread triple top break at $196.
Why? This was a point at which AMZN was able to power through a level it had failed at twice previously.
Is there any upside left here? Yes, we believe so. One could argue about timing based on the stock being a bit extended (buy a full position now? Buy half now, half if it pulls back?), but our intermediate price target is $240 so investors who want to own it shouldn’t get too cute here.
Often, we find disparities between our technical analysis and brokerage research reports fundamental reports. The Schwab report below, for example, gives a “Marketperform,” or neutral, rating without a specific price target. Thus, we like to play the piano with both hands, using technical and fundamental analysis, to glean a balanced view of a stock’s prospects.
(click the image above to download the full report)
Are you looking for a balanced view of your top holdings? For a 2nd opionion of what to do with the stocks in your portfolio (and when), feel free to send me a personal email with your request: bruce@granite-wealth.com.
