Amazon Pulls Back, But Here's Why The E-Commerce Stock Could Be Running Out Of Sellers

Amazon.com, Inc AMZN opened higher on Wednesday, just under the top price of Tuesday’s range, before starting to sell off by about 1.4%.

The e-commerce and streaming giant announced on Wednesday it has secured an $8-billion loan from several firms, including DBS Bank and Mizuho Bank, to hedge against the “uncertain macroeconomic environment,” as Benzinga earlier reported. 

Amazon, like many companies, suffered heavily in 2022 amid soaring inflation and a series of steep interest rate hikes that caused consumers to tighten their spending.

The cash injection won’t show on Amazon’s books until the company prints its first-quarter earnings results, likely in April. Meanwhile, traders and investors will be watching closely next month, when Amazon prints its fourth-quarter earnings, to see how the company fared during the run-up to the holiday season.

Fear that Amazon’s growth may have slowed significantly is reflected by the stock's 23% decline over the fourth quarter.

New Street Research analyst Dan Salmon sees upside for shares, and on Wednesday, the firm initiated coverage of Amazon with a Buy rating and $130 price target.

From a technical standpoint, Amazon looks set to head higher over the next few days if the stock prints a hammer candlestick on Wednesday. It should be noted that candlesticks are a lagging indicator that should be used alongside other signals on a chart.

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The Amazon Chart: Amazon has been trading in a fairly consistent downtrend since Oct. 26, just prior to printing its third-quarter earnings. On Dec. 28, Amazon reached a new 52-week low of $81.69, where the stock began to curl slightly upwards, which could indicate the temporary bottom is in.

• On Wednesday, Amazon bounced up slightly from the low-of-day and if the stock closes the trading session at about $84.25, Amazon will print a hammer candlestick, which could indicate higher prices will come on Thursday. If that happens, Amazon will have negated the current downtrend with a formation of a higher low.
• The slightly lower prices on Wednesday were formed on lower-than-average volume, which may indicate the stock is running out of sellers. If Amazon fails to break up above Tuesday’s high-of-day on Thursday, the stock may continue to trade sideways on decreasing volume for a period of time.
• If the selling pressure on Amazon increases and the stock closes the trading day near its low-of-day price, Amazon will print a bearish Marubozu candlestick, which could indicate the downtrend will continue and the stock will fall to a fresh low.
• Amazon has resistance above at $86.75 and $89.03 and support below at $84.25 and the psychologically important $80 mark.

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