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.

Trade AMZN now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

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.

Learn more about equity trading opportunities.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website 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.