March 27-31th Trade Ideas
Last week saw increased turbulence in the stock markets, with Deutsche Bank coming under fire. Although the markets have calmed down, there is still more volatility ahead. In the US, markets were reassured that banking sector troubles may allow rate cuts later this year. This week, there are several important economic reports to watch out for, including March’s Consumer Confidence, Q4 2022 GDP, and February’s Core PCE. These reports can affect the stock market’s sentiment, with an upward surprise potentially boosting stocks and a lower-than-expected reading weighing on the markets. The Core PCE is the Federal Reserve’s preferred inflation gauge, and a higher-than-expected reading may reverse the market’s bets of an upcoming pause in rate increases.
$AMZN – Amazon.com Inc.
Recent News
Amazon has seen slower sales growth and a rare annual net loss over the past year, leading to a drop in its stock price by about 50% in 2022. The company has responded by reducing expenses, including letting go of thousands of employees. From a business perspective, these layoffs should ultimately help streamline costs and boost profitability. However, the layoffs may also indicate that Amazon made a strategic mistake in assuming that the pandemic tailwind would last longer and expanding its workforce in anticipation of growth. The latest round of job cuts will affect Amazon’s cloud computing unit, AWS, which was responsible for all of the company’s operating income last year. Despite these challenges, Amazon’s dominance in e-commerce, cloud computing, and online advertising makes its long-term prospects strong.
Trade Ideas
- Recently, Amazon has been trading between ~$95 and $102 for a little over a week.
- On a 4-hour chart, the stock is currently trading above the 50-day and 200-day simple moving averages (SMA), while also maintaining support above the 50-day SMA on a daily chart. While recent layoffs don’t sound the best, Amazon may maintain this support level in the short term and potentially experience further upward momentum.
- Amazon stock is still a buy for investors looking beyond the next 12 months.
Shares Outstanding: 10.22B Share Float: 9.25B
$DIS – Walt Disney Co.
Recent News
Bob Iger, the former CEO, has recently replaced Bob Chapek and is implementing cost-cutting measures, including eliminating 7,000 jobs, to focus on profitability, particularly in streaming. Disney’s direct-to-consumer platforms, including Disney+, Hulu, and ESPN+, have 234.7 million subscribers, exceeding Netflix’s 230.75 million, and are expected to become profitable by 2024. Disney’s potential for long-term success in streaming, combined with a reasonable price-to-earnings multiple of 23, presents a good buying opportunity despite the challenges it faces.
Trade Ideas
- Disney stock is down around 20% from recent highs, and is holding support around the 50-day simple moving average (SMA) on a 4-hour chart ~$94.
- The current share price is trading about 6% below the 50D simple moving average (SMA), which is also trending up on a daily chart. This suggests a potentially bullish reversal in the stock’s price action.
Shares Outstanding: 1.82B Share Float: 1.82B
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