Amazon has come under pressure following a $200 billion capital expenditure announcement during the recent earnings call, as traders chose to punish the cash burn. However, things seem to be changing.
Amazon
The market for Amazon is seeing a lot of pressure overall and recently we've seen some pretty ugly behavior. That being said, we have to ask whether or not we are forming some type of island bottom. Volume is starting to pick up and we have seen a significant amount of support at the $195 level, which is the bottom of a gap from early May.
Right now, I think the market is reacting more or less to the announcement of a $200 billion capital expenditure program for the year. And therefore, despite the fact that it probably helps in the long term, as it's focused on AI infrastructure and AWS data centers, the initial shock, I think, really beat this market down. That being said though, I think the market for Amazon ends up being a major place to watch because if the indices do turn around and it looks like they're trying to, this could be one of those major beneficiaries. After all, it's not every day that you get a $50 discount from just a couple of weeks ago in Amazon, a proven winner.
Buy the Dip Above $195 Support
So ultimately, I do think this remains a buy on the dip market as long as we can stay above the $195 level. If we were to break down below there, then I'll look to reset closer to the $170 level. To the upside, the $250 level, I think is your target eventually. And I do stress the phrase eventually. This is not something that's going to get there overnight as there was a lot of damage done, but we are stabilizing and it certainly looks like a market that I think could be a winner if you have an intermediate timeframe or even longer.