Cummins Inc. (CMI) Stock Moves Down and Here’s Why

Cummins Inc. (NYSE: CMI) shares rose on Thursday Nov 17 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, stocks opened flat this morning, struggling for direction in early trade ahead of congressional testimony by Federal Reserve Chairwoman Janet Yellen. Ahead of an appearance before the Joint Economic Committee, Yellen said an interest-rate hike could come “relatively soon,”

The S&P 500 SPX, +0.25% fell less than 0.1% to 2,176.85 while Dow Industrials DJIA, -0.05% fell 9 points to 18,858. The Nasdaq Composite COMP, +0.18% declined 0.1% to 5,291.48.

Analysts at Vetr Inc. downgraded shares of Cummins Inc. (NYSE: CMI) from Buy to Hold in a research note to investors today. With a rating of Hold on the shares, Cummins Inc. has a 52-week high of $141.65. The one-year price target of $126.15 is less than the opening price of $136.20, causing a fair amount of other analysts to comment on the company recently. Material and crucial digressions in the company’s actions, future outlook or industry can cause downgrades as the analysts believe that the future prospects for the security have dropped from the original recommendation.

Shares of Cummins Inc. (NYSE: CMI) opened at $136.20 on Monday and traded in a range between, $135.40 and $136.49, and last traded at $136.45, which represents a jump of $0.60 or 0.45% from the previous closing price.

Cummins Inc. (NYSE: CMI) now has a market cap of 22.87B.

Cummins Inc. (NYSE: CMI) Average Daily Trading Volume

The stock’s average daily volume is 1,517,330 shares out of a total float 167,050,000 and some 104,501 shares traded hands yesterday, below the average. Momentum traders often use swings in trading volume to pinpoint heavy volume aggregation or circulation by institutional investors, so look for trading volume to pick up in the coming days.

As with all potential breakouts, investors watch for volume to be at least 40%-50% higher than normal on the breakout to show that fund managers and other professional investors are jumping in.

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

These professional investors have substantial teams of analysts that investigate thousands of stocks, so it is good validation to see them buying a stock you are researching.

Cummins Inc. (NYSE: CMI) 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 marking the activity of these professional investors—and the moving averages they influence—it allows for traders to make more useful choices on trades.

With that in mind, Cummins Inc. (NYSE: CMI) now has a 50-day MA of $128.41 and 200-day MA of $120.69. It has traded in a 52-week range between $79.88 – 141.65 and today’s last price is 3.67%% lower than the 52 week high of $141.65.

Indeed, earnings growth is among the most critical things to look at in regards to stock investing and, accordingly, investors look for companies that have grown their earnings by at least 25% over the past 3 years.

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