Stock Of The Day: Getty Images — An Image Of Market Technicals

Shares of Getty Images Holdings, Inc. GETY are blasting off Tuesday. The company announced that it is merging with Shutterstock, Inc. SSTK. This will create a $3.7 billion visual content company.

The chart of Getty illustrates an important market dynamic. Even when there is major fundamental news, technicals can still come into play. This is why it is our Stock of the Day.

In the market, certain price levels are more important than others. This can be seen on the chart below. The $3.85 level has been important for Getty since July.

It was resistance then, in August, and again in September. Then it converted into support in October.

Now it has become resistance once more.

Despite the significant fundamental news regarding the merger, as you can see on the chart the shares hit resistance this morning at $3.87 before reversing.  This shows how precise trading action can be around these important levels.

Traders and investors who paid $3.85 for shares in October were happy that they did so when the stock trended higher soon after.

Read Also: UniFirst, Getty Images, Shutterstock And Other Big Stocks Moving Higher On Tuesday

But in November it reversed and broke the support. A large move lower followed. When this happened, some of these traders and investors thought their decision to buy was a mistake. They experienced ‘buyer's remorse'.

Many of them decided that they would hold onto their shares, but if they could eventually exit their positions without losing money they would do so.

As a result, this morning when the stock rallied back to levels around $3.85, these remorseful buyers placed sell orders. The large concentration of these orders created resistance at the same price that was support and, at least for now, has put a ceiling on Getty.

Sometimes when a stock reaches resistance, a selloff follows.

This happens when some who wish to sell at the resistance become concerned that other sellers will undercut them. They know the buyers will go to whoever is willing to sell at the lowest price.

They don't want to miss the trade, so they reduce the prices they are willing to sell their shares for. Other concerned sellers see this and do the same thing. It can create a snowball effect that pushes the price lower.

This is what happened when Getty reached the $3.85 resistance in July, August, and September and it appears to be the case now.

In the stock market, there may be important news that can lead to significant moves. But as the chart of Getty illustrates, technical dynamics can still be important and affect the price action.

Read Next:

• General Motors Powers Up Diplomatic Security: Suburban Shield Heads To Qatar

Image: Shutterstock