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

Cummins Inc. (NYSE: CMI) shares fell on Tuesday Dec 13 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 DJIA, +0.47% climbed 106 points, or 0.6%, to 19,905. If the Dow finishes higher, it will notch its seventh straight gain.

The S&P 500 index SPX, +0.56% gained 10.45 points, or 0.5%, to 2,267 and the tech-heavy Nasdaq Composite Index COMP, +1.02% added 48 points, or 0.9%, to 5,461.

Both the S&P 500 index SPX, +0.56% and Nasdaq Composite COMP, +1.02% ended lower on Monday, with investors appearing reluctant to push shares higher ahead of the Fed meeting

Shares of Cummins Inc. (NYSE: CMI) were downgraded by analysts at Vetr Inc. in a note to their investors today. Vetr Inc. currently has a rating of Sell on the stock. As a means of comparison, a number of other analysts have spoken on the stock in recent days, and the company has earned a consensus one-year price target of $131.65, a decrease compared to the opening price of $142.41. Cummins Inc. stock has a 52-week high of $147.10. Downgrades happen when analysts feel that the future prospects for the security have dropped from the initial recommendation, often due to an important and major digression in the company’s procedures, future vision or industry.

Cummins Inc. (NYSE: CMI) shares last traded at $142.05, which represents a drop of $0.27 per share or -0.19% from the previous closing price. Opening at $142.41, they ranged from $141.91 and $143.00 throughout the day.

Cummins Inc. (NYSE: CMI) currently has a market cap of 23.81B.

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

The stock’s average daily volume is 1,512,250 shares out of a total float 167,060,000 and some 90,645 shares crossed the trading desk yesterday, below normal. Trading volume is likely to increase in the next few days as momentum traders often use swings in trading volume to identify substantial volume accumulation or dissemination by institutional investors.

While an increase in 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 delivers a positive signal to market traders that institutions may be moving in, so institutional sponsorship is crucial.

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 researching thousands of stocks. Thus, watching their interests is a good way to make sure you are buying the right stocks.

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

With that in mind, Cummins Inc. (NYSE: CMI) now has a 50-day MA of $134.99 and 200-day MA of $124.23. It has traded in a 52-week range between $79.88 – 147.100 and today’s last price is 3.44%% lower than the 52 week high of $147.10.

Indeed, earnings growth is among the most crucial things to look at in regards to stock investing and, accordingly, investors identify companies that have grown their earnings at least 25% or more over 3 consecutive years.

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