Shares of Novo Nordisk A/S (NYSE:NVO) are trading lower on Monday. One of the drugmaker’s obesity treatments failed to match Eli Lilly's tirzepatide in a Phase 3 trial. This sparked the sell-off, and Novo has broken an important support level.

This means it could keep moving lower, which is why it's our Stock of the Day.

Like any market, supply and demand drive the stock market. If a stock trends lower, there’s more supply, or shares for sale, than there are to be bought.

This results in a downtrend. It forces traders and investors to undercut each other's prices.

But when a stock reaches a support level, the buyers flood the market. There are enough buy orders to take in or absorb all of the sell orders, so the price stops going down.

As you can see on the chart below, there has been support for Novo Nordisk around the $43.50 level.

And as you can see, sometimes stocks rally after reaching support. This happens when anxious, impatient buyers start bidding against each other. They want to be willing to pay the highest price in the market, so the sellers will come to them.

Other anxious, impatient buyers see this and do the same. This results in the stock rallying.

But sometimes when a stock falls to support, the opposite happens. The sellers eventually overpower the buyers, the support breaks, and the price drops below the support.

This is what just happened with Novo, and it could mean the stock is going lower. If the price is below what had been support, it shows that the buyers who created the support are gone. They have finished or canceled their orders.

With this large amount of demand out of the way, sellers will once again undercut each other's prices to draw buyers back in. This could put Novo into a new downtrend.

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