Amazon's Slow March Forward May Get A Political Boost, Drawing Attention Toward Direxion's AMZU, AMZD ETFs

As one of the biggest tech juggernauts and a dominant leader in e-commerce, Amazon.com Inc. (NASDAQ:AMZN) has long represented a reliable investment. On paper, this reputation hasn't really changed, with AMZN stock gaining over 11% on a year-to-date basis. However, this performance falls noticeably short of the S&P 500's run during the same frame of 16.48%. Naturally, the lag raises questions about forward viability.

What makes the technical print of AMZN stock even more curious is that it conspicuously lags the Nasdaq Composite's return. Since the beginning of this year, the aforementioned index moved up more than 21%. In the trailing six months, the Nasdaq marched northward to the tune of 23%. In contrast, AMZN could only muster a rally of 15.5% in the same period.

However, it's possible that Amazon could see fundamental relief. At a high level, the House of Representatives just passed a short-term funding bill to end the longest government shutdown in U.S. history, bringing an end to 42 days of political stalemate. While the move doesn't necessarily represent a direct catalyst for AMZN stock, the concession may help bring some stability to a chaotic situation.

Another factor to consider is the judicial realm. Currently, the U.S. Supreme Court is facing a case that could unravel some of the most significant components of President Donald Trump's economic legacy; in particular, the recent tariffs imposed during his presidency under the International Emergency Economic Powers Act (IEEPA).

To make a long story short, if the Supreme Court strikes down the Trump tariffs — or cuts into the IEEPA's authority — several retailers could see relief. One of those names might be Amazon, as the company's business model is highly dependent on manufacturing in China and other overseas markets. By logical deduction, if supply chain costs come down, more profits could be reflected in the bottom line.

Still, AMZN stock isn't an easy beast to figure out. One factor that may give investors pause is the options market. Over the past month, a significant number of sessions have exhibited negative sentiment rather than positive. To be fair, options sentiment is incredibly difficult to decipher, as normal hedging activities may appear bearish. Nevertheless, that investors apparently feel the need to hedge suggests that Amazon's narrative isn't fully straightforward.

The Direxion ETFs: With both sides of the table having justification for their positions, financial services provider Direxion provides countervailing exchange-traded funds. For optimistic investors, the Direxion Daily AMZN Bull 2X Shares (NASDAQ:AMZU) seeks the daily investment results of 200% of the performance of AMZN stock. For pessimistic speculators, the Direxion Daily AMZN Bear 1X Shares (NASDAQ:AMZD) seeks 100% of the inverse performance of the namesake security.

While these products offer many practical applications, a core driver of Direxion ETFs is flexibility. In typical cases, traders interested in leveraged or short positions must engage the options market. However, financial derivatives impose complexities that may not be suitable for all investors. In contrast, Direxion ETFs can be bought and sold much like any other publicly traded security, thus easing the learning curve.

Though convenient, market participants of specialized funds must consider their unique risk profile. First, leveraged and inverse ETFs typically incur greater volatility than standard funds tracking benchmark indices, such as the Nasdaq Composite index. Second, Direxion ETFs are designed for exposure lasting no longer than one day. Holding these ETFs longer than recommended may expose traders to value decay due to the daily compounding effect.

The AMZU ETF: Since the start of the year, the AMZU ETF lost about 1%. However, in the trailing six months, it's up more than 19%.

• Currently, the technical profile of the AMZU ETF appears robust, with the price action firmly above its 50 and 200 DMAs, along with the 20-day exponential moving average.
• Since a big spike that occurred on Halloween, volume levels have noticeably declined, which may present forward-looking risks.

The AMZD ETF: Since the beginning of January, the AMZD ETF lost 17%. The performance in the past six months is only marginally better, down 16%.

• At the moment, the technical profile of the AMZD ETF would be considered rather poor, with the price action below the simple moving averages and the 20-day EMA.
• While technical sentiment isn't encouraging, acquisitive volume has picked up recently, which may signal a pivot.

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