Amazon’s share price: what to expect from Q2 results

Amazon share price: forecasts from Q2 results

It’s been a decent year thus far for Amazon’s share price, though nowhere near as good as last year when the Covid-19 pandemic forced more into making purchases online and ensuring the e-commerce giant was a clear beneficiary. The reflation trade has relatively outperformed since the start of the year, and that has meant the gains since January for the tech giant lag relatively.

But, while companies tied to the reopening trade may have enjoyed decent share price gains, it’s been a struggle on the earnings front. It’s here where Amazon hasn’t been one to worry about, consistently beating estimates by sizable amounts.

Expectations (figures according to finance.yahoo.com) have been moved higher for the second quarter (Q2) from a previous $9.54 to $12.22, which means if the tech giant can match last quarter’s stellar $15.79 results and it’ll have already beaten estimates comfortably.

Revenue has been on a consistent climb, a theme expected to persist and aided by Prime Day held earlier this year (as opposed to Q4 2020, and Q3 prior). Its Q3 outlook will also be of great importance and will be the first quarter without Jeff Bezos at the helm.

Most analysts recommend a buy to a strong buy, by a big margin, with the average price target well above where its share price currently resides.

Trading Amazon’s Q2 results: technical overview and trading strategies

As always, technicals in the face of fundamental events hold less relevance, but a glance at the chart and key technicals show a bull trend technical overview.

Further, prices reflect the following:

• They are well above the key moving averages (MAs) on the weekly chart
• A positive directional movement index (DMI)
• An average directional movement index (ADX) that isn’t just showing an ongoing propensity to trend but with a reading that’s rising
• They are retracing partially off the upper end of the Bollinger Bands

However, the lack of follow-through beyond key levels on some weeks and the partial pullback has meant that its overview has been stalling somewhat, at times giving contrarian sell strategies an edge.

With any significant fundamental event where volatility could rise, levels are less likelier to hold, and could result in a breach or break when the figures are released.

Those expecting the technical overview to remain bullish, and fresh highs in the price, can consider conformist buy strategies either buying on the breach of a level to the upside or buying but after a reversal on a break in key support levels.

Those expecting the technical overview to stall further, if not suffer, can entertain contrarian sell strategies by either selling at the resistance levels (though with increased volatility ideally after a reversal) or selling at support levels on a breakout.

Learn more on how to buy, sell and short Amazon shares

Amazon weekly chart with DMI, ADX, MA, and Bollinger bands

Amazon weekly chart with IG’s client sentiment

IG client sentiment* and short interest for Amazon shares

When it comes to sentiment amongst IG clients, it has been a consistent extreme buy bias, usually above 90% (blue-dotted line in the above weekly chart), and in turn significant beneficiaries of the latest bullish moves even after factoring in prices partially retracing off of record highs last week. And, they have upped that majority long bias from 91% to 94% as of this morning.

Short interest (according to shortsqueeze.com) shows a very small amount as a percent of float, at only 1.04% and where the number of shares shorted – 4,520,000 – has dropped from 4,830,000 prior.

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day. Client sentiment on the weekly chart (blue-dotted line) is calculated at the start of the week.