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Amazon Jumps on Earnings - Can It Hit New Highs?

Amazon shares are jumping on a robust earnings report but the stock isn't hitting new highs on the news. Here's how the stock looks now.

The fact that  (AMZN) - Get, Inc. Report isn’t hitting new all-time highs after a blowout earnings result has to be at least somewhat concerning for investors.

The stock is off its session high but is still up about 5% on Friday after better-than-expected quarterly results.

Second-quarter revenue of $88.91 billion grew 40.2% year over year and beat estimates by - get this - more than $7.6 billion. Earnings also crushed expectations, coming in at $10.30 a share vs. estimates for $1.50.

It’s clear that stimulus checks and the coronavirus are helping drive sales for Amazon at this point. This becomes even more clear as Amazon’s AWS unit came slightly short of expectations, with sales of $10.81 billion vs. estimates of $11.02 billion.

However, despite this robust report - and the bullish analyst takeaway from the quarter - Amazon stock isn’t up at new highs yet. That’s even as Facebook  (FB) - Get Meta Platforms Inc. Class A Report and Apple  (AAPL) - Get Apple Inc. Report hit new highs on earnings.

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Daily chart of Amazon stock.

Daily chart of Amazon stock.

Is the post-earnings reaction in Amazon bad? No, not at all. But let’s not forget just how powerful of a report this was. As a result, traders and investors would like to see the stock climb to new highs.

In mid-July, Amazon stock ran to a new all-time high up at $3,344.29. After a pullback to the 20-day moving average, Amazon shares bounced, but could not retest those highs, topping out near $3,240.

After a very nice consolidation in a bull flag pattern, Amazon shares are resolving to the upside with Friday’s rally. Bulls now want to see key support hold on a dip. Specifically, that key support zone comes into play at the 20-day moving average and the 261.8% extension near $3,090.

A break below these marks puts $2,925 in play, followed by the 50-day moving average. While this wouldn’t be unhealthy price action in respect to the longer term trend, it would be disappointing considering how strong of a report Amazon just delivered.

On the upside, let’s see if Amazon can rotate over this week’s high near $3,247. Above that puts the three-times range extension in play near $3,303, followed by the all-time high near $3,344.