Banking turmoil presents opportunity in consumer sector – AMZN

/ AMZN is available for trading on the Varchev Absolute Trader platform. The article is not a trade recommendation. /

Foundation

Banking turmoil in the US in recent days has caused strong outflows from the stock markets and at the same time has a highly negative effect on the Fed’s plans to continue tightening. A potential early end to interest rate hikes is positive for consumer discretionary stocks. Amazon is already with greatly reduced costs, the forecasts are for continued growth of revenues and a return of profit to maximum values in 2024.

Bank Expectations

The big investment banks have very positive forecasts for the company – 93.3% buy rating. The 12-month price target is at the level of $134.51, which represents a potential return of 45.5%.

Market Profile

A strong increase in volumes is observed around the upper limit of the Value area ($92 – $96), there is also the currently formed point of control, which means that the price can stay in this area and therefore provide support on the downside pressure. The other peak of volumes is observed around the $118 level, which is likely to be difficult to cross when reached and the area around $118 may provide resistance.

Technical Analysis

Price action shows a potential reverse with increased volumes from the horizontal support zone (86 – 90), Sequential prints 13, which indicates overheating of the current movement and DeMarker does not confirm the down movement and is beyond oversold. A break of the high ($94.16) of yesterday’s bullish engulfing candle and a close above the descending corrective channel and 65MA will confirm the beginning of an upward movement. A potential first target is in the $108 – $110 zone.

Conclusion:

Buy on the expected breakout to the upside with a potential first target in the $108-$110 zone.

Alternative scenario:

If, after the breakout, the price returns and closes below $88 – $89, the rise will remain as a bull trap and a new downward wave is likely to develop. Stop loss is below $88 – $89, measured against the size of the margin account.