Tech stocks found themselves on the short end of the market, with Amazon price and that of other technology stocks on the Nasdaq 100 taking heavy hits. Amazon share price is on its way to a third day of losses after it suffered a steep fall as the market opened. Amazon price had previously been trading 0.2% lower in premarket trading.
Of concern to investors on the day is the corporate filing that showed that Amazon paid no tax after its Luxembourg division reported a loss of 1.2 billion euros, despite European sales revenues of 44 billion euros. Amazon has a tax credit due from forwarded losses which it can use to avoid taxes. However, this could stir potentially unwanted scrutiny from government authorities.
The decline from the 3551.77 resistance marked the correction from the completion point of the bullish flag’s measured move. The bearish pullback candle formed a bearish engulfing candle pattern with the 29 April candle, and this was followed by a massive bearish outside day candle on 3 May.
Today’s bearish action takes the correction a notch lower, violating the 3347.32 and 3300.43 support levels. If the active daily candle closes below 3300.43 with a 3% penetration, the breakdown of that area is confirmed and the door towards 3253.66 blown wide open. Below this level, the neckline of the previous double bottom of 4 March and 26 March becomes a new target to the south.
Bulls would be searching for a potential dip-buying opportunity off the support levels mentioned. A bounce of price off 3253.66 or 3173.69 ultimately needs to break past 3300.43 to signal continuation, with the 3347.32, 3435.00 and 3494.46 price levels serving as additional targets to the north. 3551.77 remains the price to beat for restoration of the uptrend with the formation of a new higher high.
