Shares of Delta Air Lines, Inc. show an important market dynamic that traders can profit from.
Buyer’s remorse is prevalent in the stock market and that’s why the move higher in Delta has stalled out at $46.
There’s a reason there is resistance at this important level—it was previously had been a support level.
A large number of investors buy stocks when they are at support levels. But if the price eventually drops below it, many of these investors now regret their decision to buy.
They experience buyers’ remorse and decide to sell.
But many are reluctant to take a loss. As a result, they decide to sell if the stock gets back to their buying price. This way they can get out without losing money.
If there are a large number of these sell orders, a level that had previously been support can convert into resistance. As you can see on the following chart, that’s what happened with the $46 level for Delta. It could continue to keep a top on the price.
