Amazon stock has been riding a brutal decline, yet may have just bottomed. Here’s how the charts are shaping up now.
Big tech has been getting steamrolled over the past few trading sessions, with Amazon (AMZN) – Get Free Report being one of the downside leaders. That’s even as shares are up more than 13% so far on Thursday.
Alphabet (GOOG) – Get Free Report (GOOGL) – Get Free Report, Microsoft (MSFT) – Get Free Report and Meta (META) – Get Free Report haven’t helped matters either, as they’ve been under heavy selling pressure.
While Apple (AAPL) – Get Free Report has been under pressure, it was able to stay above its October low, as well as its 2022 low made back in May.
At one point Thursday, Amazon stock was up 14.6%. A new cost-cutting plan is helping. Coming into the day, shares were down in 10 of the last 11 trading sessions and had fallen 28.6% in that span.
Is this what capitulation will look like for mega-cap tech? Time will tell, but at least there’s now a low to measure against.
Trading Amazon Stock
Weekly and daily chart of Amazon stock.
Chart courtesy of TrendSpider.com
We have two charts above, with the weekly chart on the left and the daily on the right. While Amazon is enjoying a nice move higher on the day, the stock is not out of the woods.
Even if the low is in, there are quite a few overhead hurdles that can act as resistance.
The first line in the sand is the 10-day moving average around $95.50. If bulls can push through this level, they can clear active resistance.
That opens the door to the $100 to $102 area. This zone is significant. It’s where we find major resistance from 2018 to 2020 and strong support from earlier this year.
Bulls’ job is simple: Get Amazon stock back above this zone.
If they can do that, then the stock will look much healthier, even though it will still have plenty of downtrends and moving averages to fight through. I can’t emphasize the importance of this zone enough.
Below it and Amazon stock remain vulnerable to more selling pressure.
If the stock can reclaim the $100 to $102 area, it will have investors looking to see if it can clear the 21-day moving average and ~$105 — the post earnings high — which would open to the gap-fill level near $110.
The bottom line: Amazon needs to close above the 10-day moving average and reclaim the $100 to $102 area. If it can do that, bulls gain serious momentum. If it can’t, the stock may have still bottomed, but remains vulnerable to a pullback.
