Trading is quiet in Amazon.com, Inc. (NASDAQ:AMZN) Monday. This follows Friday’s move higher of more than 9.5% due to earnings, and the shares reached a new all-time high.

Traders are watching Amazon to see if the rally will continue. There is something that experienced traders will be looking for. This is why it is the Stock of the Day.

Many newer traders believe that fundamentals, such as earnings or dividends, drive stock prices. But most of the time, in the short run, moves are due to psychology and shifts in supply and demand.

For example, when a stock is trending up, there is seller remorse in the market. Some of the people who sold their shares regret it when the price rises.

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Disappointed traders and investors will repurchase their shares, but only if they can get them at the same price they were sold for.

If the stock drops back to the sell price, they place buy orders. If there are numerous buy orders, it will make support form. If the shares hold this support, they tend to move ahead.

See the Amazon chart below.

In May, the stock hit resistance around $212 and then backed off a little. But in June, this resistance was broken, and the price moved higher.

When this happened, some of the people who sold around $212 decided selling was a mistake. They also decided that if they could eventually do so, they would buy their stock back if they could get it for the same price it was sold at.

There were so many of these buy orders, the level that had previously been resistance converted into support. This set the stage for the next move higher.

On Friday, Amazon broke resistance around $242. Traders are watching now to see if this level will ‘convert’ into support as well. If it does, another move higher may follow.

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