In one of the few brokerage moves during Tuesday's trading, Citigroup lowered online retailer (NASDAQ: AMZN) to sell from hold, citing valuation concerns. The covering analyst also reduced his price target on the shares to $34 per share from $35.

We believe that Amazon's current valuation implies a level of operating margin expansion that is simply not attainable, the brokerage said in an accompanying research statement.

Other concerns cited included rising online advertising costs and aggressive pricing and shipping promotions.

Ahead of the opening bell, AMZN shares are down nearly one percent in pre-market action. The equity spent the past few sessions of 2006 consolidating into its rising 10-week moving average, but the slightest move lower could result in a solid breach of this trendline.

On the flip side, AMZN is warring with technical resistance in the 41 area and an options-related challenge at the 40 strike, which represents the site of peak call open interest in the January and April series.

Short interest is notable on AMZN, as nearly 14 percent of the stock's float has been sold short, amounting to a respectable short-interest radio of 6.5 days to cover. It is hard to imagine a short-covering-induced rally, however, unless AMZN snaps out of its current funk to resume an uptrend in the short term.