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Trends & Analysis
News

Crude oil declines on profit taking

News

Delta Air Lines shares crash despite earnings beat

News

GBP spikes ahead of major economic data

News

Gold hits another record high on bank demand

News

Will Meta Platforms’ magnificent run continue

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Asset Watch

Be very careful with Amazon

Tuesday, September 19, 2023

Bearish S&P 500 seasonality has officially arrived, and the sell-off on Sep. 15 seemed like investors’ attempt to front-run the action. As Big Tech makes up the largest component of the index, stocks like Amazon, Apple, Microsoft and Tesla often do the heavy lifting on the upside and the downside. If the correction continues, 2023’s winners may suffer the most as the drama unfolds.
Speaking of which, Amazon confronts a precarious technical backdrop, and while the e-commerce giant has been on an uptrend throughout the year, its mettle may be tested in the days ahead.
Amazon faces resistance from its August 2022 highs, and intraweek rallies have been sold when the level approaches. Even though the 10-week moving averages held as support throughout most of the 2023 rally, the price action on the right side of the chart shows how the gap continues to narrow.

Because of this, a breakout or breakdown could be on the horizon, and when the latter occurred in October 2022, the 10-week MA became resistance en route to new lows.

 

Another ominous indicator is Amazon’s RSI divergence, whose stock has recorded three new weekly closing highs, while its RSI (the black line at the bottom) has recorded lower highs. Consequently, momentum has weakened at a time when S&P 500 seasonality is bearish, and Amazon confronts a make-or-break technical challenge.

 

Is Amazon’s risk-reward proposition poor right now, or will a breakout to new highs silence the doubters?


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