Amazon’s (Nasdaq: AMZN) news yesterday was huge.
It was a not-so-subtle jab at how soft this economy is right now.
Just think about it. Amazon is entering their peak season. Normally they are hiring tons of extra workers to help keep up.
And they did.
In October, it was announced they planned to hire 150,000 employees for the holidays.
But to announce layoffs at the corporate and technology side. In other words, they are cutting higher paying jobs.
It’s part of a shift we are seeing across the board.
Laying off higher level employees to save costs and hiring cheaper labor to keep things running.
It’s the dilemma in the jobs market.
Hiring is still going strong, but it’s a lot of upper-level employees looking for work and settling for less.
This is what you see during recessions, which we are 100% in.
And it will deepen in 2023.
One thing to watch, to see how soon this next drop is coming, is earnings.
This week, we have two key stocks to watch to see exactly how bad things are leading up to this holiday shopping period – Target (NYSE: TGT) and Nvidia (Nasdaq: NVDA).
Target (NYSE: TGT)
Earnings: November 16, Before the Open.
Consensus: EPS $2.14, Revenue $26.37B.
Avg. Analyst Rating: 2.1 (Buy), Price Target $192.40.
Target, the brick-and-mortar retail giant, isn’t going to be able to skirt the weakness.
The stock fell over 20% in May on an earnings report that showed higher costs and inventory issues weighing on results. More pain is coming and we could see another big move from the stock soon.
Shares are trading in a rising trend channel after that drop in May. There’s a near term support around $167.50, but the main levels to watch are the red resistance and bright green support.
That doesn’t give much room to the upside without breaking out, just 3.5% from yesterday’s close. But the downside move could be over 10% in quick fashion.
Shares are in the weakening quadrant and if they fail to hold here and move higher, they risk tumbling as the stock enters the lagging quadrant based on the relative rotation graph.
Any further signs of weakness, or soft outlooks as we head into the holiday period could easily sink the stock in this sensitive market.
Nvidia (Nasdaq: NVDA)
Earnings: November 16, After the Close.
Consensus: EPS $0.68, Revenue $5.8B.
Avg. Analyst Rating: 2.1 (Buy), Price Target $189.37.
Nvidia isn’t tied directly to holiday shopping, since it is a tech stock, but this period definitely drives the tech sector too.
And fresh off news of Amazon layoffs in the tech sector, this is going to be a pivotal earnings season for the once high-flying stocks.
The stock has surged 47% off the lows from October and now are right at a key resistance point of the downtrend. Take a look…
I just don’t think we are at the point in the bear market where it’s smart to chase near-50% rallies.
Not yet.
Anything can happen this week on earnings, but, in the months ahead, I believe the stock will revisit the lows.
What we are watching this week is for more overall weakness in the underlying report.
That’s what should start showing up in order to confirm another drop in the market.
Either way the market goes, we’ll be ready to trade.
For all my Flash Alerts readers out there, I’ll add these companies to my Bank It or Tank It watch list and send you an alert when a key level is triggered.
If you are not a member of this service, now is the perfect time to join. We are ramping up our watchlist, which trigger potential trades when key levels are hit. I’ve dropped the price the lowest possible to make sure everyone has access to these opportunities that can unlock quick gains.
Let’s get it!
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE