Amazon stock is trying to break out but has one key level left to clear.
A handful of megacap tech stocks have driven equities higher in 2023. While Tesla (TSLA) – Get Free Report, Nvidia (NVDA) – Get Free Report, Apple (AAPL) – Get Free Report and others seem to get all the credit, investors seem to forget that Amazon stock is up about 26% year to date.
Economic worries have plagued this stock, as investors worry about a recession prompting consumers and the tech sector to cut spending. (Lower tech outlays could weigh on Amazon’s cloud business, Web Services.)
Interestingly from a technical perspective: Despite the year-to-date rally, shares of Amazon have not fared well over longer measures.
The stock is down 31% over the past year and is down 11% over the past three years. Lastly, the shares remain more than 43% below their all-time high.
This type of performance isn’t what generally comes to mind when investors think of a stock like Amazon.
Can the stock finally break out and can it do so ahead of the earnings report?
Trading Amazon Stock
Daily chart of Amazon stock.
Chart courtesy of TrendSpider.com
Amazon stock is moving well on Friday. While the S&P 500 struggles for direction, Amazon is up more than 3.5% at last glance.
The rally has the shares clearing the key $103 to $105 area, as well the 61.8% retracement of the recent pullback. This measure was acting as a lid on Amazon stock.
The problem? The shares are running right into the 200-day moving average. In early February this measure acted as resistance, even as Amazon popped higher and rallied more than 7% ahead of the earnings report.
With Amazon next reporting earnings Thursday, the shares could continue higher. If they do, the 78.6% retracement near $108.50 could be in play.
The situation gets interesting if Amazon stock can clear both the 200-day and the 78.6% retracement. If it can, we could see a move back up to the first-quarter high of $114.
As for the downside, it’s really key to see how the shares handle the 200-day moving average here. Rejection from this level puts the $103 to $104 area back in play as potential support.
A reversal back down through this zone puts $100 and the 50-day moving average back in play. Below that and we could be looking at the $96 area again.
Earnings are likely going to play a big role in what happens from here, but knowing these key levels is critical for the intermediate term in Amazon stock. For now, keep an eye on the 200-day moving average.
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