Stock Of The Day: Did D-Wave Quantum Just Break Out?

Shares of D-Wave Quantum Inc. (NYSE:QBTS) are trading lower on Tuesday, after gaining 20% on Monday when enthusiastic retail traders took it up.

D-Wave broke resistance with this move. This is why it is the Stock of the Day. This breakout may result in a new uptrend forming.

Many traders overcomplicate the markets. They believe they are analogous to a chess game or a math equation. This belief is not correct because chess and math are logical.

Markets are not.

Markets consist of people, and people can be irrational and emotional. In the short term, this is what moves stock prices.

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When a stock is trending higher, it is because buyers are anxious and impatient. They are afraid they will miss the move, so they cut ahead of and outbid other buyers. This puts the shares into an uptrend.

When a stock reaches a resistance level, it stops going higher. This is because at these levels, there are large amounts of shares for sale. The buyers can acquire all the shares they wish without pushing the price up.

The tide can turn quickly at resistance levels.

This occurs when some sellers become anxious and impatient. They are afraid they will miss the move lower, so they reduce their offer prices and undercut each other. This puts the shares into a downtrend.

Sometimes, when a stock reaches resistance, buyers overpower sellers. The resistance ‘breaks', and the shares move higher.

As shown in the chart, D-Wave Quantum broke through the $28.70 resistance yesterday.

Breakouts tend to be followed by moves higher. If a stock is trading above what had been resistance, it may indicate that the sellers who created the resistance have either filled or canceled their orders.

Buyers will once again be forced to outbid each other if they wish to purchase shares. This could put the stock into a new uptrend, and it may be about to happen with D-Wave Quantum.

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