Stock Of The Day: Why Qualcomm Stock Remains Stuck In A Range As Speculation Of Intel Takeover Grows

Qualcomm Inc‘s QCOM stock has been stuck in a trading range since early August, with analysts speculating about a potential bid for Intel Corp INTC. Despite this, shares have faced resistance at the top of the range, which has prompted our trading experts to make it the Stock of the Day.

As the chart below shows, the top of the range has been around $175.00.

Resistance can stay intact for a long time because of buyer's remorse. Some traders and investors bought shares while the stock was at the top of the range and came to regret doing so when the price moved lower soon after.

Some thought they made a mistake and decided to sell, but they didn't want to lose money. As a result, when the shares rallied back to resistance, these remorseful buyers placed sell orders. If there is a large number of these sell orders, it will create resistance at the level once again.

Read Also: Qualcomm Takeover Of Intel Is ‘Logically Unlikely’ In Face Of Regulatory Challenges, Analyst Says

The bottom of the range is around $158.00.

Support can stay intact for a long time for the opposite reason: sellers’ remorse. There are traders and investors who sold shares at the bottom of the range. When the price moved higher, a number of them thought they made a mistake and decided to buy their shares back.

But they don't want to pay a higher price than they sold them for. As a result, when the price drops back to the bottom of the range, they place buy orders. If there are enough of these buy orders, it will create support at the same price that had previously been support.

If understood and applied correctly, technical analysis is the study of investor and trader psychology. These are what cause patterns to form on charts. Support can stay intact for an extended time because of seller's remorse. Resistance can stay intact for an extended period because of buyer's remorse.

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