Gap Inc. (GPS) Shares Slip, Investors Watching Closely, Here is Why

Gap Inc. (NYSE: GPS) shares rose on Tuesday Nov 22 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 opened opened higher, trading above 19,000 for the first time ever, while the S&P 500 traded above 2,200 shortly after the opening bell on Tuesday.

The S&P 500 SPX, +0.17% opened 5 points, or 0.2%, higher at 2,202. The Dow Jones Industrial Average DJIA, +0.20% added 45 points, or 0.2%, to 19,002. The Nasdaq Composite COMP, +0.25% began the session up 16 points, or 0.3%, at 5,385.

Analysts at Zacks Investment Research downgraded shares of Gap Inc. (NYSE: GPS) from Buy to Hold in a research note to investors today. With a rating of Hold on the stock, Gap Inc. has a 52-week high of $30.74. The one-year price target of $25.18 is less than the opening price of $25.23, causing a fair amount of other analysts to issue statements on the stock in recent days. Downgrades occur when analysts feel that the future prospects for the security have dropped from the initial recommendation, often because of an important and crucial change in the company’s procedures, future vision or industry.

Shares of Gap Inc. (NYSE: GPS) opened at $25.23 on Tuesday and has traded in a range between, $25.17 and $25.47, and last traded at $25.39, a spike of $0.40 or 1.60% over the previous closing price.

Gap Inc. (NYSE: GPS) currently has a market cap of 10.13B.

Gap Inc. (NYSE: GPS) Average Daily Trading Volume

The stock’s average daily volume is 6,077,470 shares out of a total float 228,279,000 and some 889,414 shares crossed the trading desk yesterday, lower than normal. Trading volume is likely to increase in the next few days as investors often use increases in trading volume to pinpoint heavy volume growth or distribution by institutional investors.

While higher trading for short periods will not mean much, however, a trend of heavy trading volume on the buy side over a series of days or weeks delivers a positive indicator to market traders that institutions may be moving in, so institutional sponsorship is critical.

Institutional sponsorship simply refers to 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. So watching their interests is a good way to ensure you are buying the right stocks.

Gap Inc. (NYSE: GPS) 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.

Traders can make more effective choices on trades when they follow the trading habits of professional investors.

Trades for Gap Inc. (NYSE: GPS) have ranged from $17.00 – 30.74, and the stock now has a 50-day MA of $26.56 and 200-day MA of $23.37. Today’s last price is 17.40%% lower than the 52 week high of $30.74.

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

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