Teradata Gaps Higher But Slams into Important Resistance

Shares of software company Teradata Corporation TDC soared on a good earnings report, but they've hit a wall of resistance and are now trending lower on the day.

Resistance is a concentration of sellers. They are offering to sell their shares at the same price. In this case, it’s $54.

When stocks reach resistance, there is more supply for the stock than there is demand. Investors can buy all the shares they need to. There is no fear of pushing the price higher.

Stocks often trend lower after they hit resistance levels.

This happens when some of the sellers in the crowd believe the stock is starting to move down. They are willing to accept lower prices for their shares. This selling forces the shares into a downtrend.

On Feb. 9, TDC hit resistance at the $54 level. After this, it trended lower and reached $40 by Feb. 26.

Today, shares hit resistance there again. There’s a good chance they begin to trend lower once more.