Amazon Rebounds From Earnings Fall - Here's How to Trade It - TheStreet

Amazon (AMZN) - Get Report shares were getting slugged in Thursday's after-hours session. In Friday trading, though, the shares are off just 1.8% to $1,749.

That's up more than $125 a share from its extended-hours low. While the company reported 24% revenue growth on sales of $69.98 billion and beat Street estimates, Amazon missed on earnings expectations.

Profit declined year-over-year as spending on one-day shipping ramped up. While management has been telegraphing this headwind for some time now, it still seems to be catching Wall Street off guard.

Or at least it was. The shares were down big on the earnings miss and weaker-than-expected guidance. But with Friday's impressive price action, Amazon stock looks as if it may shake off the less-than-ideal quarterly report.

Given the price action and significance of Amazon, it's no surprise Real Money selected it as the Stock of the Day.

Keep in mind, Amazon stock has been biding its time for quite a while, up just 4% over the past 12 months. That lags all of FAANG peers, except Netflix (NFLX) - Get Report , which is down about 10% over the same time frame. In fact, the next closest peer is Apple (AAPL) - Get Report , which is up 13.4% over the past year.

Can Amazon stock play catch-up to its peers going into the seasonally strong holiday period?

Amazon and Apple are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN or AAPL? Learn more now.

Trading Amazon Stock

Image placeholder title

The chart above reflects some positives and negatives. Starting with the good news: Amazon stock opened well above its extended-hours lows, about $75 per share above the ~$1,625 lows. Further, it's been able to rally off the open, erasing a bulk of its early post-earnings losses.

The bad news? Well, AMZN stock is still trapped in a bearish channel (blue lines), which is marked by a series of lower highs and lower lows. Further, the upside is crowded between $1,757 and $1,800. In that range, Amazon stock faces its 50-day and 200-day moving averages, channel resistance (blue line) and the 61.8% retracement.

So what's the trade?

A move down to $1,675 would be discouraging, but if it holds as support, bulls can consider adding to or initiating a long position. Short-term traders may look to bid AMZN stock up from here, but they should be cognizant of the resistance zone laid out above.

Breakout traders will be looking for a move north of $1,800.

Save 57% during our Halloween Sale.

Don't let this market haunt you and join Jim Cramer's Investment Club, Action Alerts PLUS.

Click here to sign up

!

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.