Broadcom Inc. (NASDAQ:AVGO) is our Stock of the Day, as it continues to trend higher on Monday, and there is a good chance this uptrend continues.

If a stock makes a rapid move through price levels, then eventually consolidates and returns to those levels, it is likely to move quickly back through them. This is a basic market principle.

It happens because when a stock moves rapidly through price levels, only a small amount of vested interest may develop among traders and investors.

A common reason resistance forms in markets is that people with losing positions have an opportunity to sell at break-even. See below.

Broadcom Chart

In January, people who purchased shares around the $355 level regretted doing so after the price fell below it. Some of them decided that they would hold onto their losing positions, but if they ever had the opportunity to exit at breakeven, they would do so.

So when the shares returned to this price, they sold. There were so many of these sell orders that it created resistance around the level again.

As you can also see on the chart, in December the price dropped from around $412 to around $355.

The shares fell so quickly through these prices. As a result, there wasn't enough time for a significant number of people to buy who are now remorseful. As a result of this, now that Broadcom has entered these same levels but going in the opposite direction, there may not be many sellers in the market.

Those who wish to buy shares will be forced to pay premiums and outbid each other to attract sellers. This price action could result in Broadcom continuing to move higher.

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