Amazon is one of a wave of tech stocks set to report earnings this week, and most analysts are bullish.
Not Craig Johnson, chief market technician at Piper Jaffray.
"I get nervous when you start getting stocks that are more than 20 percent above their 200-day moving averages and that's exactly what you have with Amazon right now," Johnson said Friday on CNBC's "Trading Nation."
Amazon is trading at 27 percent above its 200-day moving average and has not crossed below that support level in two years.
That's not the only technical detail giving Johnson pause.
"You've got a divergence between the overall relative strength index and price. That suggests to me a little bit of an easing in momentum," he said.
During recent sessions, Amazon's relative strength index, a measure of overbought and oversold conditions, has risen back up to March levels. It trades at around 57, below the 70 threshold that usually indicates overbought conditions. The metric topped out at more than 90 in late January.
"A lot of things are going to have to really come through well for Amazon to kind of keep this stock moving higher in here," said Johnson.
Amazon is scheduled to report earnings after the bell Thursday. It's expected to post a 2 percent decline in profit, but a 40 percent increase in sales, according to data compiled by FactSet.
Chad Morganlander, portfolio manager at Washington Crossing Advisors, practices caution when it comes to the technology sector as a whole. He echoes Johnson's concerns over valuation.
"You have top line and revenue growth expectations already built into the valuation of these companies," Morganlander told "Trading Nation" on Friday. "Fundamentals are really quite positive but overvaluation keeps us a bit away from the growthy-type names."
Among the FANG names, Facebook trades at 21 times forward earnings, Amazon 144 times, Netflix 96 times, and Alphabet nearly 25 times. The broader XLK Technology ETF has a 17 times multiple, while the S&P 500 trades at 16.6 times earnings.
"With that said, there are companies within the tech sector that you want to look at if you have a three- to five-year time horizon," said Morganlander. "We believe Microsoft, you're going to see strong top line growth, not only for the next two years but over the next five years. "
Microsoft is also scheduled to report earnings on Thursday afternoon. Analysts forecast profit growth of 16 percent and sales growth of 9 percent.
Other major tech stocks set to report earnings this week include Alphabet on Monday afternoon, Twitter and Facebook on Wednesday, and Intel on Thursday. It's the biggest week of the earnings season with just over one-third of S&P 500 companies releasing quarterly reports.
Disclosure: Washington Crossing Advisors holds Microsoft. Chad Morganlander does not personally own the stock.