Stock of the Day: Where is the Bottom for Bloom Energy?

Bloom Energy Corporation (NYSE:BE) is higher in premarket trading on Monday. The shares dropped more than 11% on Friday due to concerns the company is burning through cash and may have some-short term funding issues.

But the shares could have found a bottom. A reversal may even take place. This is why Bloom Energy is the Stock of the Day.

When stocks sell off, they tend to stop going lower when they reach price levels that have previously been support. This is the result of regretful or remorseful sellers.

These are people who sold shares at the support level and later decided it was a mistake after the price moved higher. Some vow to repurchase their shares if and when they could eventually get them for the same price they were sold at.

As a result of this, when the stock heads lower and gets back to the level that had been support, they place buy orders. If there are enough of these orders, it will form support.

As you can see on the chart, there was support for Bloom Energy at $190 in August. There is a chance the selloff may be over.

But this support could break. If it does, there is a chance the shares trend lower until they reach the $163 level. There was support around this price in July.

If this support breaks, the next stop could be around $117. This level was support in March.

The best traders don’t try to guess where the bottom is. They wait for a reversal to start before jumping in. If they wait for the reversal to start, they can have some confidence that the sellers who pushed the shares lower are gone.

They have finished or canceled their orders.

With the sellers gone, the buyers take over and the shares move higher. Bloom Energy may be about to form a new uptrend.

BE Stock Price Activity: Bloom Energy shares are trading higher by 2.08% at $197.33 during premarket trading on Monday, according to Benzinga Pro data.

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