AMZN stock cares about its 200-day moving average. In fact, it cares a lot. When it pushed above its 2903 Fibonacci target in late 2020, it spent 8 months waiting for the SMA200 (the thick red line below) to arrive and another 11 months defending it. When it finally broke down in January 2022, it began a plunge that ultimately exceeded 50%.  Since January 2023, it has recovered nicely, clawing back above the SMA200 to the midline of the channel that dates back to the year 2000.But, this leaves it at its 200-week moving average and overbought amidst negative divergence while long overdue for a backtest of its 200-day moving average. A backtest from current prices would amount to about 20% – though the SMA200 is on the rise.

It should be noted that AMZN has been more volatile than the overall market. But, it’s not hard to imagine a sharp decline in the third largest component of the S&P500 leaving a mark on stocks in general.

continued for members…The initial support would presumably come at the SMA100 as it rises above the purple neckline – about 114 for a 13.6% drop.  After that, it’s the SMA200’s job to stop a decline at around 106.If the SMA200 should fail, it’s a long way down to the white channel .236 line – currently around 85. Note that the daily RSI is backtesting a broken trend line of support – one of my favorite bearish indicators.

How will we know when the decline has started? Note that the SMA10 is threatening to drop below the SMA20 for the first time since Mar 17. Today’s pop could potentially prevent this bearish development. But, if it doesn’t, watch out.

GLTA.