Why Amazon (NASDAQ:AMZN) Continues to Post New Highs

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Amid the overall uncertainty of the market, there is a handful of stocks that have a considerably better risk to reward ratio than others. FAANG or Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), and Alphabet (GOOGL) are the most popular and most traded stocks on the market. Amazon, in particular, has been a real winner this year gaining 38% on the year even as the market begins to stall.

How High Can Amazon (NASDAQ:AMZN) Go? 

There doesn't seem to be many signs of Amazon (NASDAQ:AMZN) slowing down either. Right now it's headed for its 5th record high in a row without any real pullback. There have been some small dips along the way such as when the President of the United States went out of his way to FUD the tech and retail giant on Twitter (NASDAQ:TWTR) back in April. This was short lived however and Amazon (NASDAQ:AMZN) rallied as quickly as it fell, indicating buyer confidence at an extreme high.

So high, in fact, it's considered a "sure thing" by many traders, and analysts. This has a powerful psychological effect on the marketplace and there are few who dare to short sell it. Today only 1.3% of Amazon's 400 million plus share float is being short sold... which is probably wise given it's performance to this point, beating its earnings per share estimates by nearly double.

Speaking technically, there are more bullish indicators to suggest Amazon (NASDAQ:AMZN) will continue its long-term uptrend. The relative strength index had fallen into short-term downtrend which was easily broken as prior resistance was pushed through. Now the $1600 USD level has apparently become support for the stock and resistance is at $1645. What the bull wants is to break this $1645 level and make it the new support. This is likely to occur, almost inevitable, but a healthy dose of skepticism is never a bad thing.

There is always the possibility that AMZN will reject the $1645 level it is at now and will begin a new downtrend. This isn't too much of a worry unless AMZN breaks it's $1600 USD support. There is also a handful of analysts that point out that AMZN is in fact very overbought at the moment and is sure to shed some of its gains before it can continue higher. I agree Amazon (NASDAQ:AMZN) is overbought currently and it does need to consolidate before it can print much higher on its ticker. This could indicate a correction is coming but with enthusiastic buyers waiting for any drop in price it probably won't be a very deep one unless there is a very sharp turn in sentiment.

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