Gigamon Inc. (GIMO) Stock Moves Down and Here’s Why

Gigamon Inc. (NYSE: GIMO) shares fell yesterday on heavier trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Analysts at Raymond James Financial Inc. downgraded shares of Gigamon Inc. (NYSE: GIMO) from Outperform to Market Perform in a research note to investors today. The company currently has a rating of Market Perform on the stock. As a means of comparison, a number of other analysts have issued reports on the stock in recent days, and Gigamon Inc. has secured a consensus one-year price target of $52.14, less than the opening price of $52.23, a difference of 10.06 percent. Gigamon Inc. stock has a 52-week high of $56.38. Considerable and integral changes in the company’s procedures, future outlook or industry can cause downgrades as the analysts believe that the future prospects for the security have dropped from the original recommendation.

Meanwhile, the Dow Jones Industrial Average DJIA, +0.62% finished up 112.58 points, or 0.6%, at 18,281.03 yesterday.

The Nasdaq Composite Index COMP, +0.50% rose 26.36 points, or 0.5%, to end at 5,316.02, and is up 0.1% for the week to date.

The S&P 500 index SPX, +0.43% added 9.24 points, or 0.4%, to close at 2,159.73.

Shares of Gigamon Inc. (NYSE: GIMO) opened at $52.23 yesterday trading between $49.98 and $53.50, and last traded at $51.81, which represents a drop of $3.32 per share or -0.06 compared to the previous closing price.

Gigamon Inc. (NYSE: GIMO) currently has a market cap of 1.83B.

Gigamon Inc.Trading Volume

The stock’s average daily volume is 822,031 shares out of a total float 30,258,000 and some 2,065,399 shares traded hands yesterday, above normal. Significant increases in trading volume and price inflation together could mean heavy volume aggregation by institutional investors.

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

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

These professional investors retain substantial teams of analysts that investigate thousands of stocks, so it is good corroboration to see them taking a postion in a stock you’re considering.

Gigamon Inc. 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 following the activity of these professional investors and how they affect moving averages, traders can make well planned trades.

Trades for Gigamon Inc. (NYSE: GIMO) have ranged from $19.57 – 56.38, and the stock now has a 50-day MA of $48.92 and 200-day MA of $38.54. Today’s last price is 0.08% under the 52 week high of $56.38.

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

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