Albemarle Corporation (NYSE:ALB) shares are consolidating Monday. This follows Friday’s gain of 6.75%. The shares have reached a price level where they may encounter resistance. This could put a ceiling over the price. This is why Albermarle is the Stock of the Day.
Many people think that stocks move because of fundamental news. They believe a company’s trading and fundamentals are correlated.
Sometimes this is true.
But most of the time, a stock’s movement is the result of the psychology and emotions of the people who are trading it.
For example, if a stock is in an uptrend, it is because anxious, impatient buyers are outbidding one another. They are afraid that someone else will be willing to pay more than they are, and this is who the sellers will go to.
They don’t want to miss the trade, so they raise their bids.
Stocks Head Lower for the Opposite Reason
Nervous and anxious sellers undercut each other. These sellers know the buyers will go to whoever is willing to sell at the lowest price.
They don’t want to miss the trade, so they reduce their offer prices.
In addition to driving trends, emotions can create important levels.
As you can see on the chart, the $169 level was support in May. When this support broke, some of the people who bought shares decided it was a mistake.
Some held on to their losing positions, but when the stock rallied back to $169, they saw the chance to get out at breakeven. They placed sell orders, creating resistance at the former support level.
The same thing may happen around $147. It was support in June. If the current rally reaches it, remorseful buyers trying to exit their positions at breakeven can create resistance.
This could result in the current rally ending or pausing.
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