Hold Amazon Stock, Buy Tesla Stock, Sell Valeant Stock – Today’s Technical Trading Ideas

Amazon.com Inc (NASDAQ:AMZN) stock enters overbought territory ahead of Q2 earnings.

Shares of Seattle, Washington-based Amazon.com Inc (NASDAQ:AMZN) have had a great run lately, with the stock gaining by about 40% since the beginning of the year. Close to 16% of these gains have come in the last three months alone. With Amazon poised to report its earnings for the second quarter of 2017, later today, a lot of anticipation has built up. And Amazon’s technical charts are reflecting this anticipation. AMZN stock has entered overbought territory based on two popular indicators, the Bollinger Bands, and the Relative Strength Index (RSI). Amazon’s stock price is touching the upper Bollinger Band, which is considered to be a sign of overbought conditions. Typically, traders look to the RSI for a reinforcement of this signal. When both indicators concur, the signal is considered to be strong. In this case, Amazon’s RSI has a reading of 71, higher than the commonly used overbought threshold of 70, implying that this is indeed a strong signal.

If Amazon disappoints The Street with its second quarter numbers, expect to see a sizeable correction from current levels. For quick reference, let’s look at the key expectations from Amazon’s second quarter earnings. Analysts expect Amazon to deliver $37.18 billion in revenue for the quarter, translating to a year-on-year growth of 22.3%, and non-GAAP earnings per share of $1.42 per share. Analyst estimates are closer to the top end of Amazon’s second quarter guidance of between $35.25 billion and $37.75 billion in revenue. Amazon’s track record with earnings is impressive, and the company has beaten estimates in three out of its last four quarters, with an average positive surprise of 17.75%. Given this track record, though, you might not want to sell the stock right now. However, investors may do well to let the stock settle down before initiating a fresh position.

Tesla Inc (NASDAQ:TSLA) Stock Looks Set To Move Higher.

Shares of Tesla Inc (NASDAQ:TSLA) seem to be on track to resume their uptrend after a fortnight of a rather heavy correction. Earlier this month, TSLA stock found support at its 100 day Simple Moving Average (SMA), following which, we saw the 20 day SMA falling below Tesla stock’s 50 day SMA. However, things have taken a bullish turn since then. Tesla’s stock price has risen above its 20 day SMA and now looks set to break out above the 50 day SMA as well. Meanwhile, the Moving Average Convergence Divergence (MACD) has also made a bullish crossover with the signal line, suggesting that the stock could resume its rally in the days ahead. What’s also working in favor of this indication is that the stock is still some distance away from overbought territory, based on both, the RSI, as well as the Bollinger Bands.

Short interest in Tesla stock rose further to touch 27.99 million shares during the most recent reporting cycle, pushing short interest as a percentage of float to about 27%. With days to cover at over 3 days, even a small rally may lead to short unwinding, which could aid positive momentum.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) Stock May Correct Briefly.

Shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) have embarked on a massive rally since late April this year. VRX stock has risen from about $8.5 a share to its current price of $17.7, translating to a return of over 100%. However, Valeant stock looks set for a brief correction before it resumes its uptrend. Valeant shares have entered the overbought territory, based on the RSI and the Bollinger Bands. The stock’s RSI reading currently stands at 69, just shy of the 70 red flag, while the stock price has touched the upper Bollinger Band, confirming that the stock has entered the overbought territory.

This said, the correction may not last too long, given that new bullish signals are emerging for the stock. For starters, VRX stock’s 20 day SMA, which is a reasonable support level is at $17.17, just over 3% away. While this could limit the downside, VRX’s 50 day SMA has just made a Golden Cross, going past its 200 day SMA. If you’re looking for more such technical trading ideas, check out our daily trading ideas section. If you’re also looking to discover fundamentally solid tech stocks, you should check out our top stock picks from the tech sector, which have beaten the NASDAQ by over 159%.