Stock Of The Day: Will The Trade Desk Fill The Gap?

The Trade Desk, Inc. (NASDAQ:TTD) is trading higher Tuesday after the digital advertising company announced that it would be added to the S&P 500 Index. This is considered a bullish dynamic because it expands the number of institutional investors who can invest in the stock.

There is a chance it is about to fill a gap. This could mean a rapid move higher. It is why The Trade Desk is our Stock of the Day.

As you can see on the chart, the shares have run into resistance around $85.50. This isn't a coincidence. On Feb. 12, the stock closed at $122.23. The next day, it opened at $85.18. Because there was no trading between these prices, it appears as a blank space or ‘gap' on the chart (see below).

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Some of the people who bought The Trade Desk shares around this opening price thought they got a bargain. The price was down by almost 33%.

However, as soon as they finished buying, the price dropped even further. When this happened, many of those who bought shares experienced buyer's remorse. Some of them decided to hold onto their losing positions.

They also decided that if they could eventually do so, they would sell their stocks at the same price they paid for them to get out at breakeven. So, when the shares rallied back to around $85 this morning, they placed sell orders.

The large number of these orders created resistance around the price. If the stock can break this resistance, there is a good chance it makes a rapid move higher. It would be entering the same price levels that it gapped down through in February, but going in the opposite direction.

One of the main reasons why resistance forms in markets is because of buyer's remorse. People try to sell things on the way back up so they can get out without losing money.

There was no trading in the price levels that their shares gapped down through. This means there won't be any remorseful sellers trying to get out on the way up.

The lack of sell interest at these levels could mean the buyers will need to be aggressive and force the price higher to acquire shares. This could create a new uptrend and the gap may be refilled.

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