Part 2

Amazon Inc. (AMZN)

Amazon was one of the best performing stocks during the coronavirus pandemic. The company has seen a further growth in its customers’ online purchasing power and that has led to the stock breaking new records and reached its new all-time high at $3550 on the 2nd of September. In fact, the stock was up 110% since the coronavirus sell-off occurred back in February and the market bottomed out around the 20th of March. In other words, investors and traders who bought back then have more than doubled their money already!

Company Background

Amazon Inc. is one of the largest e-commerce providers, headquartered in the US and already spreading its services across the globe. The company’s online retail business is presented through its Prime program, which is well supported by its massive distribution network. Moreover, its $13.7 billion acquisition deal of the well-knows supermarket chain Whole Foods back in 2017 helped Amazon establish its footprint in the physical grocery supermarket space.
Furthermore, Amazon enjoys its current dominant position in the cloud-computing market, particularly in the infrastructure segment, thanks to its Amazon Web Services (AWS) – one of the company’s high-margin generating businesses. Amazon has also approached the households with its Alexa powered echo devices. Alexa is backed by Artificial Intelligence and is helping the company sell its products and services.

Amazon has got a big weight and plays an important role in both the SPY (2.90%) and the XLY (22.38%).

Amazon’s presence on the market is extraordinary and it proved that further during the heavy times during the first wave of the coronavirus pandemic. It was actually one of the best performing companies and stocks out there and has kept on making lots of money for its shareholders for a long time now.

Financial Performance & Technical Picture

Amazon has been among the biggest winners during the pandemic. The main reason for that is because during the lockdown people spend more time at home and since the shopping malls and many other shops are closed, people buy more products from Amazon. That has helped the company perform very well so far this year and has delivered very strong financial reports especially in the 2nd and 3rd quarter of this year. In the 2rd quarter the company delivered earnings of $10.30 per share vs. the $1.74 per share expected by analysts. It also did a great job in the 3rd quarter, reporting $12.73 per share vs. the $7.3 expected by analysts. That has been among the main reasons for the huge bullish movement on the stock this year.

The stock made a correction from the $3550 highs in September to the current levels at $3200. Yet, something positive we have seen recently is the fact that the price failed to break the strong support at $3073 and that motivated buyers to start opening their long positions, which immediately led to a massive upside movement afterwards. We are expecting more bullish rallies due to the increased purchasing activity in December just before the Christmas holidays and therefore would like to add Amazon to our portfolio

Chart: Amazon Inc. (AMZN)

We will start buying Amazon stock at the key support line at around $3070-$3100. In case the price drops further we would be looking to add more to our buy positions at the next key support at $2950 where a lot more buying pressure is expected. Our first take-profit target will be at $3270-$3300, followed by the longer-term target at $3500-$3550 where we would be fully closing our positions and cashing profits.

JP Morgan Chase & Co. (JPM)

Company Background

Headquartered in New York City, JPMorgan Chase is the largest bank in the United States by assets and the 7th largest bank in the world. Moreover, it is the world’s most valuable bank by market capitalization.
By looking at the 3rd quarter earnings report that came out on the 13th of October, we should say the company beat analysts’ expectations again and reported $2.92 per share while the expectations were for $2.68. In fact, that has been extremely important for the Bank’s overall financial performance and has proven to the market that it has managed to perform well even during the economic slowdown caused by the coronavirus pandemic. In fact, the stock is only trading at $120 at the moment, which is quite far from the $140 highs it had reached back in February before the pandemic. In other words, the stock has a lot further room for growth from the current levels and is currently trading at just above a key support level, giving further bullish indications.

Technical Picture

The price tested the strong resistance at $124 a few times in November and December but failed to break it. That led to a short-term correction towards the key support mark at $118-$119 where lots of buying interest has been taking place and the price bounced from that strong support twice already in the past 2 weeks. It is now heading towards that level and it is very likely that traders and investors would be motivated to start buying again once the price tests that support. Therefore, we have decided to take advantage of that short-term correction and add JP Morgan stock to our portfolio.


Chart: JPMorgan Chase & Co. (JPM)

We will start buying JPM stock actively at the first key support at $118-$119. If the price drops further we would be adding more to our buy positions at around $108, just above the strong support at $106. Our initial profit-taking area is set at $125-$128, followed by the next target at $135-$138 where we would be collecting all the profit.


Sincerely,

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