Popular Reddit stocks SOS Limited (NYSE:SOS), AMC Entertainment Holdings, Inc. (NYSE:AMC), and NIO Inc. (NYSE:NIO) are trading at important support levels. If this support gives way, there’s a good chance the shares make a big move lower.
Support is a large concentration of investors who are all trying to buy shares at the same price. At support levels, there is more demand than supply. This is why sell-offs end when they reach them.
When a support level breaks, there’s a good chance a stock makes a rapid and large move lower. This is because it means the buyers who formed the support have finished or canceled their orders.
With this demand off of the market, sellers will have no choice but to accept lower prices for their shares. This could result in a snowball effect if sellers get successively lower prices. This will force the shares into a downtrend.
SOS is testing support at the $3.95 level. It has been support since early April.
There has been support for AMC at the $9 level since early March.
The support for NIO is at the $35 level. Since early March, each time shares reached $35, they rebounded.