Checking Second Opinion report for a stock I saw the following:
Look for Support at 14.81
Watch for resistance at 15.37
Could anyone please explain what this means?
asked Aug 2, 2011 at 2:45
Add a comment
|
2 Answers
Support and resistance points indicate price levels where there have been a large amount of trading activity, usually from institutions, that tend to stabilize the price of a stock.
Support is a temporary FLOOR, where people have been buying in large quantities. That means there's a good chance that the stock won't go below this level in the near term. (But if it does, watch out.)
Resistance is a temporary CEILING where people have been selling. When the stock price hits this level, people tend to sell, and push it back down. Until there are "no more" sellers at this level. Then the price could skyrocket if there is enough buying.
You should check out existing resources like Investopedia for definitions, and ask questions if there is something you do not understand, instead of asking folks to spit out definitions.
A good book for you to read might be Wall Street Words
answered Aug 2, 2011 at 7:58
-
To be fair, the original title asked for an explanation rather than a definition. Aug 2, 2011 at 20:13
-
did you view the linked content? I think it does a pretty good job of explaining. Aug 2, 2011 at 21:20
-
I wasn't claiming that you did not explain; I was addressing the legitimacy of the original question. You called out OP for requesting a definition when that was not what he did; no big deal though. Aug 2, 2011 at 22:39
-
um actually, 'spit out definitions' was not me (check the edit history) Aug 3, 2011 at 6:45
-
1An answer is not the right venue to criticize questions; this would probably have been better as a comment to the question.– jpreteAug 4, 2011 at 3:52