Stock Of The Day: Is AppLovin Breaking Out?

Shares of AppLovin Corporation (NASDAQ:APP) have continued to rally over the past few days ahead of its earnings release on Wednesday. A positive report could be a catalyst for a breakout. This is why AppLovin is our Stock of the Day.

As you can see on the chart below, the $466 level has been important for AppLovin.

Last August, it was resistance. After reaching this resistance, the shares rolled over and went lower.

After this resistance broke in September, $466 converted into support. This happened because some of the people who sold shares at this price regretted it when the resistance broke, and the stock rose.

Many of them decided to buy back their shares at the selling prices if they could. These buy orders that were placed buy these remorseful sellers caused support to form.

This support broke last week. AppLovin has rallied back to this price but has run into resistance.

Now the level is important because of remorseful buyers. These are people who decided their decision to buy shares around $466 was a mistake when the price dropped below it.

A number of them decided to hold onto their losing positions, but they also decided that if they could eventually do so, they would sell if they could get out without taking a loss.

So now that AppLovin has traded back up to this price, these remorseful buyers are placing sell orders. As for now, these orders have turned $466 back into a resistance level.

It the stock can stage a breakout and trade higher than this, it could signal a bullish dynamic. It would mean that the investors and traders who created the resistance with their sell orders are done.

They have either finished or canceled their orders. With this large volume of supply or sell orders removed from the market, new buyers will need to be willing to pay premiums to draw sellers back in.

This could force AppLoving into a new uptrend.

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