Stock of the Day: Is Dell Headed Lower?

Shares of Dell Technologies Inc. (NYSE:DELL) fell by more than 7% on Friday. Analysts attribute the move to the broader AI selloff.

There is a good chance the shares continue to drop. This is why Dell is the Stock of the Day.  

Successful traders understand how to recognize important price levels in markets. They also understand the psychology that creates these levels.

As you can see on the chart, $502 was resistance for Dell in August. Then it became support inn September and October.

Resistance levels can convert into support because of seller’s remorse. Some of the people who sold at the resistance came to regret their decisions to sell after it broke and the price moved higher.

A number of them also made the decision to buy their shares back if and when they could eventually do so at their selling price. When Dell dropped back to $502, they placed buy orders and these orders created support.

Then the level became resistance in late October.

Support can turn into resistance because of buyer’s remorse. Some people who bought shares around $502 regretted it when the price fell lower.

A number of them made the decision to hold onto their losing positions, but they also decided to sell if they could ever get out at breakeven. So when Dell rallied back to $502 they placed sell orders and these orders formed resistance.

A similar dynamic occurred at the $428 level. It was support in August and resistance in late October.

Now the same thing has occurred at the $372 level. It was support during the summer. Now remorseful buyers placing sell orders at it have created resistance and this has put a ceiling over the price.

If Dell can’t break this resistance, there is a good chance it will continue to head lower.