GE HealthCare Technologies Inc. (NASDAQ:GEHC) shares are trading higher Wednesday. The stock was upgraded from Hold to Buy, while the price target was raised from $95 to $103 by Jefferies.
But some traders and investors who hold shares may be selling them before they reach the $103 level. This is why it is our Stock of the Day.
Successful traders don't guess. They let the market tell them what to do. They identify important price levels to determine where to place their orders.
As you can see on the chart, the $94 level was resistance for the stock in March. It was also resistance in late September, and if GE HealthCare Technologies reaches this level again, there is a good chance it will find resistance once more.
This means it would be a logical level to place a sell order.
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Stocks tend to run into resistance at price levels that had been resistance before. This is a common occurrence in the markets. It is because of investor and trader psychology.
There are people who purchased shares at or around $94 in March who regretted doing so when the price trended lower soon after. Some of them decided their decision to buy was a mistake.
They wanted to sell, but they also didn't want to lose any money. So, they held onto their shares.
When the stock rallied back to $94 in September, they saw an opportunity to get out of their positions at breakeven. As a result, they placed sell orders at the same prices they paid for their shares.
This large concentration of sell orders caused resistance to form at the same level that had been resistance before.
If GE HealthCare Technologies makes it back up to $94, a similar dynamic may occur. People who purchased shares around this level in September may be looking to sell to finally exit their positions without losing money.
"Sell at former peaks" is an old saying on Wall Street. The chart of GE HealthCare Technologies shows that sometimes this may be good advice.
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