Amazon (NASDAQ: AMZN) has been a clear winner for the first two years of the coronavirus epidemic. Still, worries about its ability to retain its dominant presence have arisen. AMZN stock, in particular, appears to be struggling to maintain critical technical levels. Fundamental headwinds may be at work when this happens to a well-known blue-chip corporation like Amazon.
Of course, if you look at things from the sky, the situation for AMZN stock appears to be more optimistic than bearish. The underlying e-commerce infrastructure, for example, was a prominent benefactor of the new normal – the term linked with post-COVID-19 circumstances. Online transactions skyrocketed with consumers worried about becoming infected with the enigmatic SARS-CoV-2 virus.
Even though AMZN stock was not the only one to benefit from this consumer behavioral shift, it was the most profitable due to Amazon’s excellent brand awareness and footprint. Even if this allocation to e-commerce has decreased since then, it is still significantly higher than pre-pandemic norms.
Nonetheless, this may not be enough to preserve Amazon shares, at least in the short term. Despite its size, the corporation appears to be no match for the Federal Reserve.
AMZN Stock
In April 2020, the money supply increased by 7.2 percent month over month, the most significant monthly increase. The previous high was a little more over 3% in December 2008.
However, based on where AMZN stock is today, about 2020, Amazon has managed to dodge the unfavorable consequences of this money stock increase. However, this dynamic could result from Wall Street’s excessive optimism.
Amazon Investors
However, this creates significant issues for investments such as AMZN shares. The growth in the money supply impacts practically every good and service, not just housing. As a result, we see customers tightening their belts in the underperformance of discretionary sectors such as jewelry and apparel. That’s not good for Amazon’s future growth.
AMZN stock is battling around the $3,300 mark on the charts. Based on a rising trend line that began in July 2020, shares should be trading at about $3,500 — and that is the starting point. AMZN should be aiming towards $3,800 in terms of driving confidence.
That’s not to argue that Amazon isn’t a good investment. It is, on the contrary, a tremendously powerful entity. However, its recent technical decline compels us to evaluate the broader context. Unfortunately, a closer inspection finds that not all is well with AMZN, necessitating a cautious approach for the time being.
Stock futures in the United States were lower on Friday, pointing to a damaging week for the market as investors braced for tighter monetary policy from the Federal Reserve.
Dow Jones Industrial Average futures rose 60 points, or 0.17 percent, while S&P 500 futures remained unchanged and Nasdaq 100 futures fell 0.1 percent.
UPS and Union Pacific shares fell roughly 1% premarket following a downgrade from Bank of America, which highlighted concerns about deteriorating demand and falling prices in the industry.
The S&P 500 and Nasdaq were down 1% and 2.6 percent, respectively, on Thursday. The Dow was down 0.7 percent for the week.
