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7:17 AM
CJ
In my little quest to save $20,000 over the course of the next two years, I'm eventually going to run into little roadblocks along the way.
I like using this site to help me figure out the complex world of the stock market, so today's post is going to help me figure out what the hell "support and resistance" means in relation to the stocks I own!
This morning I was reading an analyst's take on Walt Disney's recent success in the stock market. I own a couple of shares and have been pleasantly surprise to see the stock doing really well!
In a Market Intelligence Center article, the author kept talking about support and resistance levels. I haven't got the foggiest clue what that means, so I turn to my trusty edumicators over at investopedia:
Support: The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock.
Saving 30 Translation - If a stock has a support level of $50, I believe that means buyers will start attempting to acquire the stock at $50. If the stock price falls from $55 to $50 and people buy the stock (thus increasing the price of the stock) the Support Level stays at $50. If the stock price continues to drop below $50, the support level is erased, and a new one will be determined once the stock settles and recovers.
Resistance: A chart point or range that caps an increase in the level of a stock or index over a period of time. An area of resistance or resistance level indicates that the stock or index is finding it difficult to break through it, and may head lower in the near term. The more times that the stock or index has tried unsuccessfully to break through the resistance level, the more formidable that area of resistance becomes.
Saving 30 Translation - Let's say your stock's resistance level is $55. If the stock approches the $55 mark, but can't break past it, the $55 mark becomes the resistance level. Sometimes, if the stock breaks through, the resistance level could become the new support level.
I like using this site to help me figure out the complex world of the stock market, so today's post is going to help me figure out what the hell "support and resistance" means in relation to the stocks I own!
This morning I was reading an analyst's take on Walt Disney's recent success in the stock market. I own a couple of shares and have been pleasantly surprise to see the stock doing really well!In a Market Intelligence Center article, the author kept talking about support and resistance levels. I haven't got the foggiest clue what that means, so I turn to my trusty edumicators over at investopedia:
Support: The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock.
Saving 30 Translation - If a stock has a support level of $50, I believe that means buyers will start attempting to acquire the stock at $50. If the stock price falls from $55 to $50 and people buy the stock (thus increasing the price of the stock) the Support Level stays at $50. If the stock price continues to drop below $50, the support level is erased, and a new one will be determined once the stock settles and recovers.
Resistance: A chart point or range that caps an increase in the level of a stock or index over a period of time. An area of resistance or resistance level indicates that the stock or index is finding it difficult to break through it, and may head lower in the near term. The more times that the stock or index has tried unsuccessfully to break through the resistance level, the more formidable that area of resistance becomes.
Saving 30 Translation - Let's say your stock's resistance level is $55. If the stock approches the $55 mark, but can't break past it, the $55 mark becomes the resistance level. Sometimes, if the stock breaks through, the resistance level could become the new support level.
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