Amazon chopped down for the 7th straight day

Amazon’s stock price has fallen for the seventh consecutive day. On Tuesday, October 25^th, the stock closed at 120.60. Today’s intra-day low is 89.02, a fall of over 26% in just 7 days. AMZN released its earnings on October 27^th. On that day, the stock price closed at 110.96. The next day, price gapped lower and opened at 97.91! Amazon’s revenues for Q2 2022 were $127.10 billion vs $127.46 estimated. But that’s why the stock has been falling so much. Amazon also guided its revenues lower for Q4, now expecting between $140 billion to $148 billion vs analyst expectations of $155 billion. Amazon’s CFO indicated that the company is cutting its capital expenditures budget for this year by one-third. He also said that the company is pausing hiring in certain businesses and winding down products and services where resources can be better spent elsewhere. Analysts warned that this could be the slowest holiday sales growth on record and that costs have now risen at a faster pace than revenue for five consecutive quarters.

The panel at the bottom of the chart below shows the correlation coefficient between AMZN and the NASDAQ 100. For much of the year, the 2 assets have had a strong positive correlation, which is indicated by readings above +0.80. However, notice that when AMZN released earnings on October 27^th, the correlation fell dramatically, indicating that the price of AMZN fell much faster than that of the NASDAQ 100.

The price fall for AMZN is currently supported by the 127.2% Fibonacci extension from the lows of June 14^th to the highs of August 16^th, at 89.15. Given the fast rate of decent of the stock price, the RSI has moved into oversold territory at 23.76. This indicates that price may be ready for a relief rally as price may have fallen too far, too quick.

Source: Tradingview, Stone X

If AMZN’s stock price is going to continue lower, it must first pass through a confluence of support at today’s low, the 127.2% Fibonacci extension, and a downward sloping trendline dating to August 9^th. The next support level is the low from March 2020 at 81.30. Below there, price can fall to the 161.8% Fibonacci extension from the above-mentioned timeframe at 73.53. However, notice that the RSI on the 240-minute chart is even more oversold than that of the daily chart, at 19.61. This is a strong indication that the stock may be ready for a correction. First resistance is at the highs from October 31^st at 104.84. Above there, price can move swiftly to fill the gap at 109.77, then the highs of October 25^th at 120.98.

Source: Tradingview, Stone X

The price of Amazon stock is down 25% over the last 7 trading days. Earnings and guidance are mostly to blame. However, technical indicators on the daily and 240-minute timeframe look like the stock price may be ready to bounce. If it does bounce, look at the resistance levels to get a better idea of a near-term target.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.