Amazon Slides For Second Straight Day In Tandem With S&P 500: Here's What To Watch

Amazon.com Inc AMZN was dropping 1.4% on Thursday after a volatile day on Wednesday, saw the stock trade both above and below Tuesday’s trading range.

While the S&P 500 closed Wednesday’s session down 1.56%, Amazon declined a more moderate 0.61%, showing comparative strength.

On Wednesday, the e-commerce and streaming giant notified employees in the U.S., Canada and Costa Rica of layoffs, according to a report. The move is part of Amazon’s plan to layoff 18,000 employees globally. The latest layoffs impact Amazon’s retail and human resources departments.

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The Seattle-based e-commerce giant also announced it will wind down its charity AmazonSmile by Feb. 20. The company, like many of its peers, is grappling with high inflation and steeply rising interest rates, which have caused consumers to tighten their spending.

On Thursday, Amazon gapped down slightly to start the trading day, in tandem with the S&P 500. Traders and investors are watching the S&P 500 to see if Wednesday’s decline was another hard rejection or a pullback. How the S&P 500 behaves over the next few trading days is likely to determine whether Amazon can continue showing strength.

The Amazon Chart: Amazon reversed north on Jan. 6, after creating a bullish double bottom pattern near $81, when paired with similar price action on Dec. 28. Between Jan. 6 and Wednesday’s high-of-day, Amazon soared almost 22% and negated its prior downtrend.

• Although Amazon negated its downtrend, the stock hasn’t yet confirmed a new uptrend on the daily chart by printing a higher low. If Amazon continues to decline over the next few trading days, bullish traders will want to see the stock print a reversal candlestick, such as a doji or hammer candlestick, to indicate a higher low has occurred and an uptrend is in the cards.
• Bearish traders want to see big bearish volume come in and knock Amazon down under the eight-day and 21-day exponential moving averages and the 50-day simple moving average. If that happens, the moving averages are likely to act as resistance and could drop the stock into a downtrend.
• Amazon has resistance above at $95.49 and $99.88 and support below at $92.18 and $90.77.