Stock Of The Day – Is Lucid About To Blast Off?

Trading in Lucid Group, Inc. LCID was quiet on Tuesday. But this may not be the case for long.

If the market's reversal has legs and keeps moving higher, there is a good chance that, on a percentage basis, Lucid will outperform it. This is why we have made it our Stock of the Day.

Lucid is trading just below resistance around the $2.65 level.

Resistance is a price at which there is significant sell interest among traders and investors. If a stock is moving higher, it's because demand is greater than supply. There are more shares to be bought than there are to be sold.

As a result, those who wish to buy are forced to outbid other buyers, forcing the stock into an uptrend. But at a resistance level, the tide turns. There are as many, if not more, shares for sale as there are to be bought.

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

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One of the main reasons resistance forms in markets is buyer’s remorse. This happens when the price drops after someone buys a stock. Some of these remorseful sellers decide that they will hold on to their losing positions.

But they also decide that if and when it's eventually possible, they will sell their shares at breakeven. So, if the stock moves back up to their buy price, they place sell orders.

As you can see on the chart, the $2.65 level was support for Lucid. If there is a large number of remorseful buyers looking to sell at this price, the support level can convert into a resistance level.

If the shares break this resistance, it could be a bullish dynamic. This means the investors and traders who created the resistance either finished or canceled their orders.

With this large amount of supply removed from the market, buyers may be forced to start outbidding each other again. This can create a new uptrend, and it may be about to happen with Lucid.

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