Amazon Poised to Test October Highs on Solid Results

Amazon Inc. AMZN reported profits of $130 million, or 28 cents a share, compared to net income of $201 million, or 44 cents a share, for the same period last year.  Operating income fell 40% to $192 million.  Revenue rose 34% to $13.18 billion.  Analysts were looking for earnings of 6 cents a share on revenue of $12.9 billion.

The company stock price surged in after hours trading as the company reported after the closing bell on Thursday.  Price action continued to rise on the open with the stock gapping higher by nearly 16%.  Today's weaker than expected GDP has little to no effect on AMZN.  The stock price sliced through the 200-day moving average and is poised to test resistance near $250 which was the highs reached in October 2011.

Support on the retail book company is seen near $210 which was the highs reached in late March.  A break below that level would likely push the company's stock price back into a range between $210 and the 50-day moving average near $190.

The RSI (relative strength index) which measures overbought and oversold levels, surged from the middle of the neutral range near 50, to above 70, which is the lower end of the overbought range.  In late March when this occurred, the stock price retraced nearly $20 dollars.

Momentum increased with the MACD (moving average convergence divergence index) creating a buy signal.  This is when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.  Additionally, the index moved from negative territory to positive territory, which is a sign that momentum is improving.  If the stock holds above the $210 level, a break out will be confirmed.