Positive Retail Data Brings Direxion Amazon-Focused ETFs AMZU And AMZD Into The Spotlight

Author: Benzinga Newsdesk | August 15, 2024 03:41pm

Amazon.com Inc (NASDAQ:AMZN) represents one of the big winners for Thursday, with AMZN stock seemingly benefiting from robust consumer spending data. Retail sales popped up 1% on a month-over-month basis in July. This figure beat economists' expectations of a 0.3% rise.

Adding to the enthusiasm, on a year-over-year basis, retail sales climbed 2.7%, contrasting favorably from a downwardly revised 2% in June. Further, Benzinga noted that "[j]obless claims also fell to their lowest levels in five weeks, easing concerns over weakening labor market conditions." For the week ending Aug. 9, initial jobless claims landed at 227,000. Economists on the other hand expected a count of 235,000.

It's a welcome diversion from the fallout stemming from Amazon's mixed second-quarter earnings report. AMZN stock slipped badly after the e-commerce giant missed the consensus target for net sales. In addition, the company issued soft guidance for the current quarter, with net sales projected to land between $154 billion to $158.5 billion. Previously, the consensus stood at $158.24 billion.

Nevertheless, a few pieces of positive data might not be enough to overturn the broader narrative. Earlier this year, economic challenges — particularly inflation — contributed to worrying dilemmas such as rising household debt. Therefore, both bulls and bears have a reason to trade AMZN stock.

Direxion's AMZN-Focused ETFs: For investors interested in playing either side of Amazon's narrative, Direxion offers two compelling exchange-traded funds focused exclusively on AMZN stock. First, for the optimists, the company offers Direxion Daily AMZN Bull 2X Shares (NASDAQ:AMZU). This is a 2X leveraged fund that aims to double the daily return of AMZN.

Second, the bears have the option of considering Direxion Daily AMZN Bear 1X Shares (NASDAQ:AMZD). As a bear fund, this financial vehicle provides the inverse daily return of AMZN stock.

To be clear, both AMZU and AMZD should not be held for periods longer than one day. Otherwise, due to the daily compounding effect, positions held for longer than a day may experience value erosion.

The AMZU ETF: Predictably, AMZU printed an ugly chart following Amazon's less-than-stellar Q2 earnings. However, the surprisingly positive retail sales report contributed to a significant jump higher.

• AMZU breached its 20-day exponential moving average (at roughly $30), with the bulls taking aim at the 200-day moving average ($31.06).
• The next major point of interest is the $32 line, which has acted as support throughout most of this year.

The AMZD ETF: Up until Amazon's Q2 disclosure, the bearish AMZD has predictably not performed well. Following the retail sales report, the bears are now attempting to draw a line in the sand.

• Significantly, the inverse fund slipped below both its 200 DMA ($15.35) and its 20-day EMA ($14.90).
• It's imperative for the pessimists to hold the line at the 50 DMA ($14.18). Otherwise, a slip below this critical zone could spark more downside.

Featured image by Esteban Rodriguez from Pixabay.

Posted In: AMZD AMZN AMZU