Shares of Amazon (AMZN) slipped 5% October 10, joining other mega-cap growth stocks to the downside after the president renewed tariff threats against China. The specter of the White House potentially firing thousands of currently furloughed government workers didn’t help matters for consumer cyclical stocks. Amazon is the largest in that sector.
Those headlines rewarded traders holding the Direxion Daily AMZN Bear 1X Shares (AMZD ). That inverse ETF surged 5.24% on October 10 on volume that was more than double the daily average. That’s because market participants scurried out of magnificent seven stocks, including Amazon. However, the door may now be open to opportunity for AMZD’s bullish leveraged counterpart, the Direxion Daily AMZN Bull 2X Shares (AMZU).
As its name implies, AMZU attempts to deliver 200% the daily performance of Amazon stock. That’s a risky spot to be in on days when Amazon gets drubbed, as was the case October 10. But AMZU could be primed to deliver for risk-tolerant traders. The consensus price target on the stock is around $266, or about 23% above where it settled on October 10. Alone, that could tempt some investors to buy the Amazon dip, boosting AMZU along the way.
More Amazon, AMZU Tailwinds
Yes, China looms large in the Amazon equation. It’s estimated that half the company’s third-party e-commerce sellers source goods from that country, implying supply chains could be crimped if the Trump administration purses trade levies. That’s an issuer AMZU traders need to monitor. But the possibility is there for Amazon and the Direxion ETF to benefit from the faltering U.S. dollar.
“The 10% year-to-date decline in the U.S. Dollar Index offsets some of these pressures, since foreign sales — exceeding $150 billion annually — translate into higher nominal earnings when repatriated into weaker dollars. With inflation moderating and U.S. yields dipping, the currency effect may continue to benefit Amazon’s international profit conversion through early 2026. In parallel, consumer demand remains stable across the U.S., Europe, and India, cushioning tariff impacts on core retail operations,” according to Trading News.
Amazon is one of just two members of the Magnificent Seven trading at a forward P/E ratio below its five-year average. That’s not to say Amazon is a value stock. But relative to its history, it may be enticing regarding valuation today. And if bargain hunters embrace that notion, AMZU could benefit.
The geared ETF could also be worth watching in the coming weeks. That’s because Amazon’s next earnings report is Octover 30. And that could bring increased activity in AMZU leading up to and following that report.
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