Layoffs are happening across the board and more than 153,000 jobs have already been cut at big names like Ford and UPS.
That’s a jump of 175% from exactly a year ago, making this the worst month of October job losses since 2003.
Nothing about this screams (or even whispers) that it is good for the economy or markets. But until this week, shares have continued to rise highernot lower.
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Amazon
Amazon (NASDAQ:AMZN) laid off about 14,000 employees earlier this year, mainly in HR, Alexa and cloud computing. According to reports, the company is considering another 30,000 cuts in the coming months. You would expect such a move to spook the market.
But here’s what’s interesting: These aren’t seasonal warehouse jobs. These are long-term career-level positions and will be eliminated before the holidays. That tells me that AMZN is leaning toward something bigger: operational efficiency.
In April, AMZN hit a low of around $160. Then it hit revenue — and blew it away — marking a new year-to-date high. We continue to build on that strength.
So while the headlines focus on the number of job losses, I look at how AMZN is positioning itself ahead of the biggest retail stretch of the year. A smaller footprint and stronger margin profile could be the catalyst that keeps this chart moving higher.
Microsoft
Microsoft (NASDAQ:MSFT) also announced new layoffs this quarter, part of an ongoing wave that has reduced headcount across multiple divisions through 2023.
But again, the story isn’t just in the job losses. It’s in the graph.
The MSFT bottomed in April, but then recovered hard throughout the summer, reaching $550 in early August. It retreated and regained the $550 level last week. That kind of price action only happens when the market believes in what’s driving it.
What strikes me is the seasonal pattern. Over the past 31 days, MSFT has rallied 90% of the time in the past 10 years, through mid-December. Even in 2021, the only year this was not the case, the decline was less than 1%. Over the past three years, the average return on this route has been 5.5% or more.
That’s why MSFT is high on my list. The pattern is strong. The graph supports this. And while the layoffs are difficult to watch, they are part of a broader shift that leadership says is necessary to stay competitive.
And from what I’ve seen so far, the markets agree.
Intel
Intel (NASDAQ:INTC) is in the midst of a deep restructuring. The company has already cut thousands of jobs and is reportedly on track to cut up to 24,000 jobs as part of its multi-year turnaround.
That seems like a dramatic blow to the stock, but I don’t see panic in the chart. Not even a little bit.
INTC hit a low around $18 earlier this year. And last week it recorded a high of $41.53 -A double in just a few months. That move doesn’t come because Wall Street feels sorry for Intel. This happens because they streamline operations and reduce overhead where AI and automation can fill the slack.
And many of these layoffs are affecting middle management – the kinds of roles that AI and automation are starting to replace across the board. It’s never easy news, especially for the people affected.
But from a market perspective, INTC is making some tough calls to get leaner and focus resources on the next step. And based on the moves we’re already seeing on the charts, traders are already starting to price that in.
Layoffs are not good news for anyone. But in the eyes of the market, companies that make tough decisions early on often come out stronger on the other side.
As traders, we focus on what is actually happening in the market, not what the news networks are saying about it should are doing. And right now the graphs are clear:
- Amazon is building strength in the holiday season.
- Intel’s momentum is gaining momentum.
- Microsoft has a seasonal pattern that I trust and a chart that backs it up.
So while the media focuses on the cuts themselves, I look at the price action and the patterns that are forming underneath.
That’s where the opportunity first presents itself.
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