Stock of the Day: Did Rocket Lab Breakout Yesterday?

Rocket Lab Corporation (NASDAQ:RKLB) shares are trading higher on Wednesday. They broke out yesterday.

This can be a bullish dynamic, which would suggest a further move up. This is why Rocket Lab is the Stock of the Day.

• Rocket Lab stock is surging to new heights today. What’s driving RKLB stock higher?

In July, the downtrend in Rocket Lab ended around $59. When a rally followed, some of the people who sold there decided that doing so was a mistake.

Some also decided that, if they could eventually do so, they would repurchase their shares at the same price they sold them for. When the shares dropped back to $59 in September, buy orders were entered.

The large quantity of these orders formed support.

When this support broke in October, many who bought shares at it decided that doing so was a mistake. Some also decided to hold onto their losing positions, but to sell if they could ever do so at breakeven.

When Rocket Lab rallied back to $59, these remorseful buyers placed sell orders. These orders created resistance at the price that had been support.

Sometimes when shares reach support, sell-offs follow. This happens when some of the traders and investors who created the resistance with their sell orders become anxious and impatient.

They worry that others will be willing to sell at lower prices, and they know this is where the buyers will go. As a result, they reduce their offer prices. Other anxious sellers see this and do the same thing.

This forces the shares into a downtrend.

But sometimes when a stock reaches resistance, the buyers eventually overpower the sellers. When this happens, the price moves higher and traders say it is a breakout.

This can be a bullish dynamic.

With the sellers gone, buyers will be forced to outbid each other and pay higher prices if they want to draw sellers back into the market. This forces the shares into an uptrend.

Rocket Lab may continue to trend higher.

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