4/30 Recap
Pretty slow day so far with everyone just waiting for FOMC tomorrow. We opened today with some awful economic data, Chicago PMI was 37.9 vs an estimate of 45. Whatever the Biden Administration tells us about the best economy of all time just isn’t right, these are recession/stagflation figures we’re seeing. Even recently look at every trucking name, they’re all smashed, typically those lead to the downside before a recession but again this is where it is confusing because Visa, American Express, and all the credit card names are telling us how robust spending is. Are people just paying bills with credit cards? I don’t know but something is just off in all this data we’re getting at the current moment.
The SPY is back to looking bad again, we never got that 8/21 ema bullish crossover that the bulls would have wanted to see although we got close and now we’re back below the 8 ema. That could change with a big market reaction to Amazon today but for the time being, this is not bullish. Nobody knows what is coming at FOMC tomorrow but if it gets ugly we may break that 100 day, the white line, for the first time in a long time tomorrow. There isn’t much left for bulls if Amazon and Apple don’t lift the market this week, the megacaps will have mostly all reported by the end of this week except NVDA and the market usually goes into a lull after they’re done.
Amazon
As you know Amazon reports today, it is as big a bellwether of our economy as any. They seemingly cannot ever report into a strong tape, this market is weak as could be again. I think ultimately they post very strong numbers, their best quarter ever in terms of operating income is my guess, the question will come down to the guidance. Amazon is always cautious and never overly optimistic about the quarter ahead. If they don’t issue a dividend or buyback with everyone looking for it and warn on consumer spending or AWS capex needs, it could go as low as that gap fill at 160 from last quarter. That would be my worst case scenario, a gap fill to 160 and then resume higher after the moving averages reset in a couple weeks. On the bull side, any move over 190 would be all time highs and the blue skies above where the stock can make a big move higher with no resistance above.
I expect great things from Amazon for the next few quarters, the overall market is weak, I think whether it is this week or 3 months from now, unless you’re in short term calls, you will be fine as Amazon should be materially higher next quarter with all the new seller fees being implemented now. Today, META and MSFT sold off hard on strong earnings, even Google has faded 10% off highs, the environment is rough out there and it’s hard to imagine how phenomenal the numbers and conference call must go for Amazon to buck that trend. I remain in my June 2026 leaps, I’m not too concerned with today assuming nothing material changes and I think tomorrow you will see a lot of lifted price targets as analysts adjust numbers higher.
If you want a checklist of what needs to happen today for an AMZN big move up
Revenue tops $143B
Operating Income needs to be $13B+
FCF needs to be $10B+
AWS needs to be 16%+
Ads need to be 30%+
3P needs to be 20%+
Subscriptions needs to be 15%+
NO surprise increases in capex
If International went positive it would be a big surprise
A dividend or buyback is implemented
I know its tricky, but Amazon has so many segments that matter, this isn’t a 1 trick pony like many others, this is a company that is about to post over $140B in revenue for their slowest quarter. If all those things above happen, there isn’t any reason why Amazon won’t be up ALOT tomorrow. If most of those happen the stock should be green, just can’t miss on over 50% of them. Most importantly, this market appears to be the issue right now, not Amazon.
Trends
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Today’s Unusual Options Flow
Here is today’s link to the database, as always it will be open until tomorrow morning at the market open and I will have the rest of today’s action added by this evening.
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