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Amazon to Report Earnings: Here's What the Chart Says

Amazon is finally starting to wake up with earnings on deck. Will the quarterly report send shares ripping or reeling? Let's look at the chart.

Amazon  (AMZN) - Get Inc. Report has started to wake up from its multi-quarter slumber. Will earnings put it back to bed or finally get the stock on its feet?

The Street is hosting a live blog of Amazon’s Q4 earnings report and call with analysts after the close today. Please check our home page then for more details. 

Despite the lack of participation from FAANG stocks, Nvidia  (NVDA) - Get NVIDIA Corporation Report, Microsoft  (MSFT) - Get Microsoft Corporation Report and others, the Nasdaq has done pretty well over the last several months.

Apple  (AAPL) - Get Apple Inc. Report, Microsoft and other mega-cap tech companies topped out in late August and early September. While the rest of the market recovered to new highs months ago, this group has been slow to get going.

Amazon is one of the biggest culprits. Of the FAANG group, Amazon is the second worst-performing name, up just 7.3% in the last six months.

If we neglect Monday’s tasty 4.3% rally, Amazon has risen just 1.3% in the last six months. 

Amazon, Nvidia, Microsoft and Apple are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN, NVDA, MSFT or AAPL? Learn more now.

Trading Amazon

Daily chart of Amazon stock.

Daily chart of Amazon stock.

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TheStreet Recommends

There’s a saying in the trading community that goes along the lines of, “the longer the base, the higher the space.” In other words, the longer a stock consolidates or forms a base the more upside potential it has.

With Amazon, the stock could easily continue to consolidate for several more months. A base of a year or longer is not unheard of.

However, Monday’s breakout over $3,345 was impressive. It sent shares over a notable resistance level and put bulls in the driver seat. Now though, Amazon has to deliver on earnings.

Disappointing results could send the stock right back below resistance and into its cluster of moving averages. Below $3,200 and wedge support could be back on the table.

Below $3,100 could put the 200-day moving average in play near $3,000.

On the upside, the fourth-quarter high near $3,496 is the first upside target, followed quickly by the all-time high at $3,552.

While a move above this level would be great, we don’t want to see a Netflix  (NFLX) - Get Netflix Inc. Report situation where the stock takes out the high, then fades back into the prior range.

Should Amazon clear the high and extend higher, it could kickstart a larger time-frame rally, potentially putting the 161.8% extension in play up near $3,970. 

While the $4,000 level seems far off, it's possible it gets there with a stronger post-earnings breakout. Who knows, maybe Amazon will finally split its stock and send it ripping higher.