Amazon.com, Inc. (AMZN​) unexpectedly announced a bid to acquire Whole Foods Market, Inc. (WFM) on Friday. The $13.7 billion cash offer sent shares of Whole Foods nearly 30% higher and shares of competing retailers and grocers sharply lower. Shares of The Kroger Co. (KR) fell more than 10% in early trading on Friday, while Target Corporation (TGT) and Wal-Mart Stores, Inc. (WMT) both moved sharply lower early in the day before posting a modest recovery.

The market has already been concerned that traditional grocers would struggle to keep up with delivery services – such as Amazon Fresh – and meal planning services such as HelloFresh and Blue Apron. By combining Amazon's supply chain with Whole Foods' products, grocers could see renewed pressure on both top-line revenue and bottom-line margins as consumers switch to increasingly affordable delivery services. (See also: Tough Times Ahead for Kroger.)

Chart showing the year-to-date performance of Amazon.com, Inc. (AMZN) stock

From a technical standpoint, Amazon is poised to break above the $1,000 level after testing the 50-day moving average at $950.18 on several occasions. The recent pullback has helped moderate the relative strength index (RSI) to a neutral 56.70, but the moving average convergence divergence (MACD) remains bearish. The upshot is that the long-term trend remains very bullish with shares up more than 30% this year. (See also: Amazon Hits $1,000.)

Investors appear content with what would be Amazon's biggest-ever acquisition, with shares trading more than 2% higher by mid-day. With promises to keep the operation running as normal for the time being, investors may not see a full-fledged move into the grocer market for some time. Traders should watch the 50-day moving average as a key level to hold on the downside and R1 resistance at $1,021.28 as a key resistance level on the upside. With the stock's recent strength, traders may want to maintain a bullish bias for any trades. (For additional reading, see: Amazon Stock Gain Pays for $13.7 Billion Whole Foods Deal.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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