Applied Materials Inc. (AMAT) Stock Moves Down and Here’s Why

Applied Materials Inc. (NASDAQ: AMAT) shares rose on Monday Dec 19 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, the Dow Jones Industrial Average DJIA, +0.22% was trading up 37 points, or 0.2%, at 19,879, inching up to break the psychologically important 20,000 level.

The S&P 500 index SPX, +0.20% was up 6 points, or 0.3% at 2,264, with nine of the 11 main sectors trading higher.

The Nasdaq Composite Index COMP, +0.32% added 18 points, or 0.3% to 5,455.

Shares of Applied Materials Inc. (NASDAQ: AMAT) were downgraded by analysts at Goldman Sachs Group Inc. in a note to their investors today. With a rating of Neutral on the stock, Applied Materials Inc. has a 52-week high of $33.40. The one-year price target of $35.09 is above the opening price of $32.25, that has caused a number of other analysts to issue statements on the company recently. Downgrades occur when analysts consider that the future prospects for the security have diminished from the original recommendation, usually because of a material and major change in the company’s operations, future outlook or industry.

Applied Materials Inc. (NASDAQ: AMAT) shares last traded at $32.53, which is a spike of $0.02 or 0.05% compared to the previous closing price. Opening at $32.25, they fluctuated from $32.25 and $32.76 throughout the day.

Applied Materials Inc. (NASDAQ: AMAT) now has a market cap of 35.02B.

Applied Materials Inc. (NASDAQ: AMAT) Average Daily Trading Volume

2,131,982 shares traded hands yesterday, lower than the average, out of a total float 1,073,523,000. Look for trading volume to pick up in the coming days as momentum traders often use increases in trading volume to determine heavy volume accumulation or circulation by institutional investors.

While increased trading for short periods will not mean much, however, a trend of heavy trading volume on the buy side over a period of days or weeks sends a positive cue to market traders that institutions may be moving in, so institutional sponsorship is crucial.

Institutional sponsorship just refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Institutional investors such as these have substantial teams of analysts researching thousands of stocks. Thus, watching their interests is a good way to make sure you are buying the right stocks.

Applied Materials Inc. (NASDAQ: AMAT) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By spotting trends, moving averages allow traders to make those trends work in their favor and increase the number of winning trades.

With that in mind, Applied Materials Inc. (NASDAQ: AMAT) now has a 50-day MA of $30.68 and 200-day MA of $28.06. It has traded in a 52-week range between $15.44 – 33.400 and today’s last price is 2.62%% lower than the 52 week high of $33.40.

Earnings growth is a crucial factor to look at when investing in stocks and investors identify companies that have raised their earnings at least 25% or more for the past 3 years.

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