Sand Spring Advisors LLC
Priced for Perfection: AMZN
November 21, 2002
by, Barclay T. Leib
As the chart above shows, Amazon is just about at its 52-week high and one of the best performing stocks on the NASDAQ this year. At present, some anticipation of a seasonal Christmas-time upswing in sales is obviously at work to bolster this stock, just as we remember eToys always rallying in the October-November period of recent years (before that company disappeared and then came back as a part of ShopAOL -- eToys the stock now trading at 1/3 of a cent).
But Amazon is also quickly approaching a Gann fan line that we believe will offer substantive overhead resistance, just as such lines have offered resistance in prior instances (see red arrows).
Fundamentally, of course, even with its revenue growth, Amazon is still priced at an absurdly high PEG Ratio, and the company still has enough debt to sport a negative book value.
We're sellers of AMZN between 23.30 and 25.50. Recent AMZN equity price strength is not to be believed, nor likely sustainable over the intermediate term.
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