News regarding the upcoming election has made shares of Trump Media & Technology Group Corp. (NASDAQ:DJT) skyrocket.

But as you can see on the chart, the stock has run into resistance at a price level that was resistance before. This is why our team of expert traders has made it our Stock of the Day.

This price action isn't a coincidence. Stocks hitting resistance and reversing off of levels that had been resistance previously is a common occurrence in the market. It happens because of investor and trader psychology.

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Many stock market analysts believe that relevant news — in this case, an election — can make a stock move. To a degree they are correct. But short-term imbalances in supply and demand and investor psychology can also move stocks.

There are people who bought shares of Trump media around $53.50 in May. They came to think their decision to do so was a mistake when the price dropped soon after. Many of these remorseful buyers vow to sell their shares.

But they don't want to lose any money. So, they decided to be patient and wait for the stock to eventually return to their buying price. Now that that has happened, they place sell orders. This way they can exit their positions at breakeven.

This large concentration of sell orders has created resistance around the same price level that had been resistance in May.

Sometimes, shares reverse and sell off after they reach resistance levels. This is also due to psychology. It happens because of anxious sellers.

Some of the traders and investors who are trying to sell their stock around the resistance become concerned. They are worried that others will be willing to sell their shares at a lower price. These concerned sellers know that this is who the buyers will go to.

As a result, they reduce the prices that they are willing to sell their shares for. Other concerned sellers see this and also reduce the prices they are willing to sell their shares at. This action can result in a snowball effect that pushes the price lower.

Savvy traders understand that buyer's remorse can create resistance at prices that were previously resistance. They also know that anxious sellers can push prices lower by undercutting each other. These dynamics can create profitable trading opportunities.

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