Stock Of The Day: Trump Media & Technology Hits Resistance, Reverses And Trends Lower

‘Sell at former peaks' is an old Wall Street expression. This refers to how when a stock reaches a price level that had previously been a peak, it tends to hit resistance. It may also reverse and start to trend lower.

As you can see on the chart, this has been the case with the $53.50 level for Trump Media & Technology Group Corp. DJT. This is why our team of expert technical analysts has made it our Stock of the Day.

The shares first hit resistance around $53.50 in the middle of May. Soon after, they trended lower.

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When this happened, many of the traders and investors who purchased shares around $53.50 thought their decision to do so was a mistake. Many decided to get out. But they would only do so if they could without losing money.

So when the stock rallied back to the level at the end of May, many of these remorseful buyers placed sell orders. This large concentration of sell orders formed resistance at the same level that had been a peak before.

At the end of October, the same thing happened.

The stock ripped higher as investors thought President Trump would win the election. But when it reached the important $53.50 level again the sellers flooded the market and put a top on the price.

Sometimes stocks reverse and sell off after they reach resistance.

This happens when some of the investors and traders who created the resistance with their sell orders become anxious. They get concerned that others will be willing to sell for lower prices than they are and they know that this is who the buyers will go to.

So they reduce the prices they are willing to sell their shares for. Other anxious sellers see this and do the same thing. They also reduce the prices they are willing to sell for.

This can result in a snowball effect that may push the price lower.

This is what happened the last three times Trump Media reached the $53.50 level. If it rallies back up to this price, there is a good chance that it does once again.

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