Stock Of The Day: Is Pfizer About To Break Out? Expect A New Uptrend If Resistance Breaks

Shares of Pfizer Inc. PFE are making a large move higher Tuesday. But the stock has run into resistance.

It may be about to break out. This could be followed by a new uptrend. This is why our team of traders and technical analysts has made it our Stock of the Day.

Some analysts are attributing the move to the company's reaffirmation of its guidance. Pfizer sees annual sales between $61 billion and $64 billion. It also sees earnings of between $2.75 and $2.95 per share. Both numbers are in line with estimates.

As you can see on the chart, the stock is testing resistance around $26.30. If this resistance ‘breaks', there is a good chance a new uptrend forms.

When a stock is trending higher, there isn't enough supply to fill all the demand. There are more buy orders than there are sell orders.

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To get sellers interested, buyers must be willing to pay successively higher prices. This forces the shares into an uptrend.

At a resistance level, the tide turns. Resistance is a large concentration of investors and traders who are looking to sell at, or close to, the same price.

At resistance levels, there is enough supply to satisfy all the demand. Traders can buy all they wish to without pushing the price up.

This is why rallies end or pause when they reach resistance.

If the price can get and stay above a resistance level, traders say that it has staged a ‘breakout'. This illustrates an important market dynamic.

It means that the people who created the resistance with their sell orders are gone. They have either canceled or finished their orders.

With this large amount of supply taken out of the market, buyers may be once again forced to pay premiums to get the interest of sellers. This could create a new uptrend for Pfizer.

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