Trading in Space Exploration Technologies Corp. (NASDAQ:SPCX) is quiet Friday. But the shares have been trending higher. They may be on the verge of a breakout. This is why Space Exploration Technologies is the Stock of the Day.
Many new traders don’t understand that, just like in any market, the stock market is driven by supply and demand. If there is more demand, or shares to be bought, than there is supply, or shares to be sold, buyers will be forced to outbid each other to get sellers interested.
This will put the shares into an uptrend.
When the shares reach a resistance level, the dynamic changes. There is enough supply to meet all demand. Buyers are no longer forced to outbid each other, and the price stops going higher.
As you can see on the SpaceX chart, there has been resistance around the $150 level. This isn’t a coincidence. There is resistance at this level because it was previously support.
Many of the traders and investors who bought shares around $150 in June and July came to regret their decisions when the support level broke and the stock fell below it.
A number of them decided to hold onto their losing positions. But they also decided that if they could eventually do so, they would sell at breakeven.
As a result, when the shares rallied back to $150, they placed sell orders. This has created resistance.
If buyers eventually overpower sellers and push the price above resistance, traders will call it a ‘breakout’. This could be a bullish dynamic because it shows that the sellers who created the resistance are gone.
They have finished or canceled their orders. With this supply taken off the market, the stage could be set for a move higher. Buyers will once again be forced to outbid each other to get the sellers back.
This dynamic could move SpaceX higher.
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