How can you tell if a stock has overhead? What does overhead mean, and how can you spot it? The pattern appeared in the $CYRN and $TSLA charts. Turbo Trading's Head Trader, Robert Knight, talks about overhead in this 3.5-minute video. Below the video is a transcript.
This is a talk on how to tell if a stock has overhead. It was asked by one of the members. I picked the question because it was on the $CYRM (Cyren Ltd.) and we can see this is a security stock. And from 2, it has surged up to 6.65. Now backed off a little bit. But you can see a big, strong, rising channel on it.
I had said that the resistance was in this 5.75, 6 area. And so overhead just means, and I did make a bit of a mistake on this because I hadn't realized that this had a 1 for 20 reverse split. So this action here...anybody that owned that stock at that level, really they've been reversed out of the stock and that's why it was able to run as much as it did. But it's still the same. The pattern is the same.
If people have bought this stock, let's just say it wasn't rolled back. And you had some volume in here between this in here around 5.5 to 7, and maybe up into this level at 9.
These people all had bought the stock in there, from 10 down to 2. So an 80% pullback. And so like any level of resistance, they're just happy to get out of a stock at any point they can.
We see that these resistance levels are very prominent. I mean like Tesla here. We draw this all the time. There's your resistance. And you know, in the 880 level, 900, this big overhead in here, and anytime a stock tries to get up through a resistance level, all those people that bought it, they want to get out of the stock and ... that puts the pressure on the stock.
So that's the point. That's why it's resistance level, because two things happen. People that were in the stock previously, or just want to get out of it. People that bought it at $2, see that this level here, everybody wants to get out it. So they'll sell. And those short sellers that missed the buy 2 and 3 see that that comes into resistance. And so then they'll short the stock.
So whenever I see a stock has overhead, all that means is it's coming into an area of heavy resistance. And in this case, I put it between 5.50 and 7. Well, as luck would have it, it traded the 6.66 and there's a resistance. [It] got up to the -- and I just drew that line at random -- and you can see how it corresponded double top and right at that resistance line.
So that's all it means when I say stock has overhead.