It’s been a bad situation for tech stocks, with the Nasdaq down about 20% from the highs. Certain FAANG components have held up well, while others have been decimated. Amazon (NASDAQ:AMZN) is surprisingly somewhere in the middle. While far from thriving at the moment, AMZN stock is down about 26% from the highs.
However, earnings are likely to be a big catalyst when the company reports on Thursday evening. The question is, will it be a negative catalyst or a positive catalyst?
Microsoft (NASDAQ:MSFT), a mega-cap peer, is rallying slightly after earnings, while Netflix (NASDAQ:NFLX) plunged on its results and is now down 73% from its all-time high. I don’t think we’ll get a Netflix-like response in AMZN stock, but that doesn’t mean it couldn’t face downside.
Of its FAANG peers plus Microsoft, Amazon is in the middle of the pack in terms of how far it’s fallen from the highs. There has been a lot to digest with Amazon lately.
First, Amazon has a 20-to-1 stock split on the horizon to take into consideration. Second, the company has continued unionization efforts building up. Most recently, Buy with Prime is another element Amazon is introducing, where the company will allow third party merchants to utilize Amazon’s fulfillment capabilities.
Of the three, investors are likely most excited about the stock split. However, we may only hear about the second two developments from management — if we hear about them at all on the conference call.
Lastly, although perhaps not as much of a risk, investors will want to hear how Amazon is doing with its streaming video business. We’ve seen Netflix stock collapse after reporting disappointing streaming results. However, HBO and HBO Max reported solid subscriber results. So it will be interesting to see what Amazon’s numbers will be like.
As for the charts, bulls are hoping recent support near $2,700 continues to hold. If we measure from the all-time high to the Covid-19 low in 2020, that’s about where the 50% retracement comes into play.
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If we do get a bearish post-earnings reaction, the $2,450 to $2,500 area will be key for AMZN stock. Not only a key psychological area, but it’s also where we find the 200-week and 50-month moving averages, as well as the monthly VWAP measure. If this level fails, it could open the door to $2,250 or even lower.
While $2,700 has been holding as support so far this year, bulls want to see AMZN stock reclaim $2,900. Above that opens the door to the $3,000 level and the declining 10-week moving average. Above that puts the 21-week moving average in play and the $3,185 level.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
