Technical Strategy Video:

AMZN “Beat” a welcome relief heading into Jobs Number

Key Takeaways

  • Thursday decline proved to be the largest SPX decline since last February, yet expected that pullbacks represent buying opportunities and that last week’s lows hold
  • AMZN post market rise encouraging for Tech given its influence, but closing prices for Friday will count for more than after market spikes
  • US Dollar has sold off down to meaningful support, while Treasury yields look likely to break out into next week and push higher. 

SPX’s pullback failed to take away many of the positives brought on by a 260-point bounce since late last week.  Stock indices could be volatile again during Friday’s economic reports, but it’s thought that SPX likely stabilizes at 38-62% of its rally from 1/24/22’s lows.  Thus, key support to buy dips lies at 4450 then 4410, and given this scenario should not undercut 4366.  Any decline under 4366 puts a bearish short-term stance back on the front burner, which for now is premature.  It’s expected that a close back over 4600 would be meaningful and positive for SPX in the days/weeks to come.  Finally, while February might prove volatile and choppy, higher prices are expected into mid-to-late March technically and my expectations at this point are that 1/24 lows hold on any further weakness.

AMZN “Beat” a welcome relief heading into Jobs Number
Source: Trading View

Can Amazon Save Technology ?  AMZN ( AMZN 0.19% - $2776.91

(Trading post market at 5:00pm at $3291 post earnings)

AMZN joins the growing list of stocks which have trended down sharply, yet have shown little to no long-term technical deterioration.   As weekly logarithmic charts show of AMZN going back since 2016, this recent breakdown has now gotten down to more meaningful levels of intermediate-term support.  Yet, the near-term pullback has not shown sufficient stabilization just yet to argue that a meaningful low is yet at hand.   The area at $2700 from last week’s lows represented a 38.2% Fibonacci retracement level of the 2020-2021 rally, so any undercut of 2700 likely has little support until near 2449.  However, this is thought to be an excellent chance to buy dips technically and further pullbacks likely prove short-lived before a rally into March/April timeframe.   While some might consider a break under the lengthy consolidation of the last 18 months to be problematic, until more meaningful technical damage occurs to undercut 2050 (which is not expected) this recent weakness should prove to be buyable technically and the stock looks like an excellent risk/reward.  Upside resistance on gains should materialize near 3175 on a closing basis near prior lows from August-October 2021 and movement over 3350 would be encouraging towards thinking AMZN can push back to new all-time high territory.  (Chart shown below BEFORE post market earnings related spike)

AMZN “Beat” a welcome relief heading into Jobs Number
Source:  Optuma

Treasury yields across the curve are starting to show evidence that a breakout back higher is close to happening

Most of Thursday’s excitement happened in Europe, but US yields all made above-average rallies which argue for a further push higher in US 10-Year yields up to near the all-important 2% into March.  Technically, I like betting on yields going higher by owning ETF’s like Proshares UltraShort Lehman 20-year Treasury ETF ( TBT) and would hold off on adding to recent weakness in  TLT for another 4-6 weeks.  Following a breakout in yields, it should be likely time to reverse course into the Spring and favor TLT bottoming out, given a combination of Cycles bottoming for Treasuries/topping for yields as well as traditional technical structure offering chances to buy dips near last Spring 2021 lows.   However, at present, yields look to be on the verge of another push higher

AMZN “Beat” a welcome relief heading into Jobs Number
Source:  Trading View

US Dollar index looks to be closing in on meaningful support.   Thursday’s volatility was not just limited to US Equities, as the US Dollar also followed through on its sharp decline which has been ongoing most of the week.   The BOE meeting’s 4 votes for a 0.50 bp hike, along with Lagarde’s speech looks to have caught the  EURUSD a bit off-guard, and expectations rose for rates to rise to 1% by May and nearly 1.5% by end of year.   Overall, a meaningful US Dollar decline still looks a bit early and it looks right to fade the gains in Euro and Pound Sterling and expect the  DXY to turn back higher into mid-to-late February.   This might result in a postponing of a meaningful continuation move higher in commodities, or Emerging markets, though both China and also WTI Crude oil likely can still push up in the weeks to come.

AMZN “Beat” a welcome relief heading into Jobs Number
Source: Trading View

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