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Amazon Gaps Lower On Worse-Than-Expected Quarterly Revenue

Amazon.com (AMZN) reported quarterly earnings after the closing bell on Thursday, July 29. The company missed quarterly revenue expectations and the stock gapped significantly lower. The stock gapped below its 50-day simple moving average at $3,454.58, which puts it below quarterly, monthly and semiannual pivots at $3,589.11, 3,494.74 and 3,383.45, respectively. It’s above its 200-day simple moving average at $3,268.96.

A warning came from its weekly chart that showed a declining 12x3x3 weekly slow stochastic reading.

As retail stores were closed during the pandemic, consumers stuck at home shopped online using Amazon.com. In this latest quarter, with the economy reopening, online sales have slowed.

The Daily Chart for Amazon.com

Courtesy of Refinitiv XENITH

Amazon
AMZN
has been above a golden cross since February 6, 2020. This occurred when the 50-day simple moving average rose above the 200-day simple moving average when the stock was trading at $2,050.23.

Over the last 52 weeks the stock traded around its 50-day SMA between September 4, 2020 and June 10, 2021. The 200-day SMA was a magnet between February 25 and April 1, and again between May 10 and June 7. Holding this average led to strength to its all-time intraday high of $3,773.07 set on July 13. The July 19 low of $3,499.16 held the quarterly pivot at $3,589.11. The secondary high was $3,712.08 on July 26.

Following the missed earnings report on July 29, shares of Amazon plunged below three horizontal lines. The quarterly pivot at $3,589.11. The monthly pivot at $3,494.71. The semiannual pivot at $3,383.45.

Keep an eye on the 200-day simple moving average at $3,268.96.

The Weekly Chart for Amazon.com

Courtesy of Refinitiv XENITH

The weekly chart for Amazon is negative with the stock below its five-week modified moving average at $3,469.18. It’s well above its 200-week simple moving average or reversion to the mean at $12,164.37. The 12x3x3 weekly slow stochastic reading is declining at 72.57.

Trading Strategy: Buy Amazon on weakness to its 200-day SMA at $3,268.96 and add to positions at its annual value level at $2,675.36. Reduce holdings on strength to monthly and quarterly pivots at $3,494.74 and $3,589.11.

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