AMZN Share Price Hits 25-Month High After Inclusion in DJIA Index


As of February 26, Walgreens Boots Alliance (WBA) is no longer used in the calculation of the Dow Jones Industrial Average, replaced by Amazon (AMZN).

The planned index rebalancing was carried out because:
→ Walgreens shares currently have the lowest price among all companies included in the Dow index;
→ S&P Dow Jones Indices adds Amazon as it seeks to increase the Dow's retail exposure to reflect the emerging nature of the US economy. This was also influenced by the fact that shares of the retail chain Walmart (WMT) underwent a 3:1 split.

The AMZN stock chart today shows that:
→ the AMZN stock price is moving in an upward trend, its contours are indicated by a blue channel;
→ after a strong report (we wrote about this on February 5), a bullish gap formed on the chart — it is now more clearly visible between the levels of 161.5 and 166.5;
→ in the last days of winter, the price approached the upper border of the channel;
→ the price is in the upper half of the channel, and the median line (reinforced by the gap area), according to technical analysis, has the potential to provide support to it;

The inclusion of AMZN stock in the DJIA Index means that the AMZN stock market may experience a short-term surge in demand (as it often does in similar cases) as various index funds will be forced to buy AMZN stock (and sell WBA) to make their portfolios match the Dow Jones Industrial Average.

→ the price of AMZN today may already take into account the rebalancing that was announced earlier;
→ as you know, in 2021, Jeff Bezos actively sold his AMZN shares at a price of $180 per share. At the same time, according to annual corporate reporting, Bezos intends to sell about 50 million shares this year. This is seen as an argument holding back demand. And the bearish divergence on the RSI indicator hints at the depletion of buying pressure in the short term.

Although in the long term, taking into account the fundamentals, the market remains strong. According to the average opinion of TipRanks, analysts forecast shares AMZN = $208.23 in 12 months.

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