Psychological barriers in individual stocks in the United States

This paper examines the existence of psychological barriers in the closing price levels of individual stocks in the United States for the past twenty years. Due to the different pricing methods used in the US, the dataset will be divided into three periods. In each period the barriers will be examined at two different levels and several ranges; the higher level where barriers are defined as multiples of ten and five dollars, and the lower level for every whole dollar price. I find no evidence supporting the existence of psychological barriers in the dataset, neither for the higher nor the lower level. Instead price clustering is found for the lower level. Investors appear to have a strict preference for whole dollars above any other price.