Yamana Gold Inc. (AUY) Shares Slip, Investors Watching Closely, Here is Why

Yamana Gold Inc. (NYSE: AUY) shares fell 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 Yamana Gold Inc. (NYSE: AUY) were downgraded by analysts at BMO Capital Markets in a note to their investors today. BMO Capital Markets currently has a rating of Market Perform on the stock. As a means of comparison, a number of other analysts have commented on the company recently, and Yamana Gold Inc. has earned a consensus one-year price target of $5.28, above the opening price of $2.67, a difference of 20.54 percent. Yamana Gold Inc. stock has a 52-week high of $5.99. Downgrades are more likely when analysts believe that the future prospects for the security have diminished from the original recommendation, often due to a considerable and crucial change in the company’s procedures, future outlook or industry.

Shares of Yamana Gold Inc. (NYSE: AUY) opened at $2.67 on Tuesday trading between $2.55 and $2.67, and last traded at $2.57, which is a decrease of $0.07 per share or -2.65% from the previous closing price.

Yamana Gold Inc. (NYSE: AUY) now has a market cap of 2.44B.

Yamana Gold Inc. (NYSE: AUY) Average Daily Trading Volume

3,167,617 shares traded hands yesterday, below the average, out of a total float 946,206,000. Trading volume is likely to increase in the next few days as investors often use swings in trading volume to identify large volume accumulation or distribution by institutional investors.

While increased trading for one day will not mean much, conversely, a trend of heavy trading volume on the buy side over a period of days or weeks sends a positive signal to market traders that institutions may be moving in, so institutional sponsorship is very important.

Institutional sponsorship commonly 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 that research thousands of stocks, so it is good corroboration to see them taking a postion in a stock you’re considering.

Yamana Gold Inc. (NYSE: AUY) 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 identifying trends, moving averages allow investors to make those trends work in their favor and increase the number of winning trades.

With that in mind, Yamana Gold Inc. (NYSE: AUY) now has a 50-day MA of $3.15 and 200-day MA of $4.43. It has traded in a 52-week range between $1.38 – 5.99 and today’s last price is 57.10%% lower than the 52 week high of $5.99.

Earnings growth is a critical factor to consider when buying stocks and investors watch for companies that have grown their earnings at least 25% or more over a 3 year period.

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