Amazon.com, Inc. Shares May Have To Fall Before They Can Rise: A Technical Analysis

Amazon.com, Inc. AMZN shares have been hit recently and appear to have more room to fall.

Can the stock –- and the market –- manage to put in a bottom in the short-term?

What The Bulls See...

• A price-to-sales ratio of 1.82

• Positive levered free cash flow of $3.3 billion annually

• A massive cash position of $7.99 billion versus only $3 billion in debt

What The Bears See...

• A bearish technical set-up with a downside target of $305

• Razor-thin net profit margins of 0.22 percent

• A price-to-book ratio of 14.04

• A price-to-earnings ratio of 150, which is very expensive compared to estimated revenue growth of 20 percent

Technical Take

Technicians, in particular, note that Amazon shares appear to be in a short-term wave “(c)” lower (of an “abc” downside correction) with a projected downside target of $305.

From there, they are anticipating another bounce in Amazon shares to the September highs at around $347.

Overall…

Bulls will likely be looking to buy Amazon on a continued pullback to near $305 with stops in place on any close below $304.

The bears, on the other hand, will probably be looking to cover their shorts near $305 and then may re-enter those bearish positions if the stock rallies to $347.

Worth noting: Amazon is scheduled to report earnings on October 22.

Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.