Trading in DoorDash, Inc. (NASDAQ:DASH) is quiet on Monday. But that may not be the case for long. It may be about to refill a gap.
This would mean a rapid move higher. It is why DoorDash is our Stock of the Day.
One of the main reasons for market resistance is buyer remorse. People buy a stock, and if it goes lower, they vow to sell it on the way back up and get out of their positions at breakeven.
This can be seen on DoorDash’s chart around the $280 level.
Many of the traders who bought shares around $280 in August decided they made a mistake when the price dropped soon after. They also decided that if they could eventually do so, they would sell their shares at breakeven.
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When the price returned to $280 in October, these unhappy buyers placed sell orders. The large number of these orders formed resistance.
You can see on the chart that DoorDash recently gapped down from around $240 to $212. This means it closed one day around $240 and opened the next day around $212. There was no trading between these prices so it appears as a ‘gap' or blank space on the chart.
If there was no trading, there would be no one who bought shares. This means there are no remorseful buyers who will be looking to sell on the way up.
Because of this, there may not be a significant amount of sell interest between $212 and $240. If the stock does get into these levels, buyers may be forced to pay significant premiums if they wish to acquire shares.
This could result in the stock moving rapidly higher through these levels.
‘Gaps tend to refill' is an old Wall Street expression. DoorDash may soon prove it.
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