Carvana Co. (CVNA) shares are staging a comeback Thursday after getting hammered yesterday. The stock dropped almost 15% following a report from short seller Gotham City Research that alleged inflated earnings and other accounting issues.

But here's the interesting part: the rebound happening around $400 isn't exactly a surprise if you've been paying attention to how this stock moves.

Why $400 Matters

Carvana has become our Stock of the Day because it's demonstrating one of the more reliable patterns in technical analysis—resistance levels flipping into support. It's not magic, it's psychology.

Look at what happened at $125. Back in May 2024, shares hit a wall at that price level. Two months later, they finally broke through. When Carvana eventually pulled back to $125, it held. What was once a ceiling became a floor.

The same thing played out at $160. That level acted as resistance in August 2024. After the stock broke through, it came back down to $160 in April 2025 and found support right there.

Then there's $285. Resistance in April 2025, breakthrough in May, and when the stock dipped back to that level in both June and November, it bounced both times.

The Psychology Behind the Pattern

So why does this keep happening? Seller's remorse is the short answer.

Think about the traders who sold at resistance, only to watch the stock break out and keep climbing. Some of them kick themselves and make a mental note: if the stock comes back to where I sold, I'm getting back in. When enough of these regretful sellers place buy orders at their old selling price, you get support forming right where resistance used to be.

It's a self-fulfilling prophecy driven by human emotion and the desire to correct what feels like a mistake.

What Happened This Week

Carvana encountered resistance around $400 back in September. The stock found support at this level on January 2, then again yesterday after the short seller report sent shares tumbling. Today, it's climbing again.

For traders wondering when to jump into a falling stock, former resistance levels offer a roadmap. They're not foolproof, but they've proven reliable for Carvana multiple times over the past year. Whether $400 holds as the new floor remains to be seen, but the pattern is certainly there.