It looked like shares of Apple Inc. (Nasdaq: AAPL) were going to break critical support around the $142.50 level. But it held, and the stock is staging a small rebound.
Going forward, traders will be watching this. If this support breaks a big and rapid move lower may follow.
Why It's Important: There's a reason why there's support around this level. It was resistance in January, and levels that were previously resistance converting into support is a common dynamic in financial markets.
This happens because of seller’s remorse. Some of the investors who sold at $142.50 in January regret their decision to do so now that the price is higher. A number of them decide to buy their shares back, but they will only do so if they can get them for the same price they sold at.
As a result, they place their buy orders around $142.50. If there are enough of these orders, it will form support as it did here.
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