Amazon.com, Inc (NASDAQ:AMZN) gapped up almost 8% off Wednesday’s closing price and continued to surge higher intraday on Thursday.
The heavily beaten down stock plunged over 22% between Oct. 27 and Wednesday after printing mixed third-quarter earnings and guiding fourth-quarter revenue below analyst estimates.
Amazon’s strength was helping to hold the S&P 500 up over 4% from Wednesday’s close, while Tesla, Inc (NASDAQ:TSLA) was showing comparative weakness, so far unable to break up from an inside bar pattern.
The bullish move in Amazon and major indices was prompted by consumer price index data that showed inflation may be slowing. CPI data for October came in at 7.7% compared to the analyst estimate of 8%, down from the 8.2% reading for September.
Amazon’s move higher caused the stock to negate a steep downtrend in which the stock has been trading since Oct. 25. For Amazon to confirm an uptrend, a higher low will eventually need to print.
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The Amazon Chart: Amazon in the afternoon on Thursday began to retrace from the high-of-day, which may cause the stock to print a shooting star candlestick. If that happens, Amazon may trade lower on Friday, possibly to print a higher low above the $85.87 52-week low formed on Wednesday.
- If buyers come in and cause Amazon to close Thursday’s session near the high-of-day, the stock will print a bullish kicker candlestick, which could indicate higher prices will come again on Friday. If that occurs, the stock could surge up to fill an upper gap over the coming days, which falls between $104.87 and $109.77.
- Technical traders may have seen the bounce on the horizon because between Nov. 1 and Wednesday, Amazon’s relative strength index dropped under the 30% mark. When a stock’s RSI falls below that level it becomes oversold, which can be a buy signal for technical traders.
- Amazon has resistance above at $99.88 and $109.30 and support below at $95.49 and $92.18.
See Also: October Inflation Cools To 7.7%, Stocks Sprint Higher: What You Need To Know
Photo courtesy of Amazon.
