Guide to Day Traders – Acadia Healthcare Company Inc (NASDAQ: ACHC)

U.S. stocks tumbled again Thursday as investors continued to fret about the possibility of rising inflation and higher interest rates.

For the second time in four days, the Dow Jones industrial average sank over 1,000 points, or 4.2 percent, to end Thursday day at 23,860.

The Standard and Poor’s Index, the benchmark for many index funds, also shed 100.66 points, or 3.8 percent, to close at 2,581. It last hit that low in mid-November.

The two indexes have dropped 10 percent from their all-time highs, set on January 26. That means they are in what is known on Wall Street as a “correction,” fueled by fears that a long stretch of low interest rates and tame inflation, which helped driven up stock prices, might be coming to an end.

As the day wore on, it became evident major U.S. stock indexes were headed toward their fifth loss in the last six days, erasing big gains in the first weeks of the new year.

Stocks began to tumble last Friday after the U.S. Labor Department stated wages grew rapidly in January, sparking concern of higher inflation and lower corporate profits.

Earlier in Europe, stock prices declined and bond yields raised after the Bank of England stated it may boost interest rates in response to a strong global economy. Britain’s FTSE-100 Index fell 1.5 percent and Germany’s DAX plunged 2.6 percent.

The picture was brighter in Asia, where Japan’s Nikkei 225 Index climbed just over 1 percent, South Korea’s Kospi Index rose five-tenths of one percent, and Hong Kong’s Hang Seng Index gained four-tenths of one percent. (Source: Voice of America)

Top Pick for Friday: Acadia Healthcare Company Inc (NASDAQ: ACHC)

Acadia Healthcare Company Inc (NASDAQ: ACHC) has grabbed attention from the analysts when it experienced a change of -0.79% in the last trading session to close at $34.02. A total of 1,429,845 shares exchanged hands during the intra-day trade contrast with its average trading volume of 1.27M shares, while its relative volume stands at 1.13. Relative volume is the comparison of current volume to average volume for the same time of day, and it’s displayed as a ratio. If RVOL is less than 1 it is not In Play on this trading day and Investors may decide not to trade it.  If RVOL is above 2 it is In Play and this is more evidence Investors ought to be in the name.  When stocks are *very* In Play one can see a RVOL of 5 and above.  The higher the RVOL the more In Play the stock is.

Day traders strive to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures, and options are traded as well), usually leveraging large amounts of capital to do so, therefore they trade on Stocks in Play. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. Most company stocks have very little volatility. They generally move extremely slowly and they only produce big price swings when the company produces good or bad trading results, which may only happen a couple of times a year at best.

In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). If a stock does not have good liquidity then it may take some time before a broker is able to negotiate a deal to buy or sell a stock and the broker may not be able to get the sell or buy price that the trader is looking for. This is a problem for day traders and it could mean the difference between a profitable and non-profitable trade.

Traders have different rules for what constitutes liquidity and a good guide is the volume of trades and volume of shares that are traded each day. 100,000 shares traded per day would be a minimum for most traders and some require 1,000,000.

Trading volume is a gauge of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume – ADTV). A high degree of volume indicates a lot of interest in a stock. Often, a boost in the volume of a stock is a harbinger of a price jump, either up or down.

Volatility is simply a measure of the predictable daily price range—the range in which a day trader operates. More volatility means greater profit or loss. After a recent check, Acadia Healthcare Company Inc (NASDAQ: ACHC) stock is found to be 4.27% volatile for the week, while 3.23% volatility is recorded for the month.

Technical’s Snapshot:

The stock has a market cap of $3.04B and the number of outstanding shares has been calculated 89.43M. Based on a recent bid, its distance from 20 days simple moving average is 0.09%, and its distance from 50 days simple moving average is 3.21% while it has a distance of -17.77% from the 200 days simple moving average. The company’s distance from 52-week high price is -37.39% and the current price is 26.37% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 51.95 together with Average True Range (ATR 14) of 1.14.

Stock’s Valuation:

Past 5 years growth of ACHC observed at 15.20%, and for the next five years the analysts that follow this company is expecting its growth at 10.23%. The stock’s price to sales ratio for trailing twelve months is 1.08 and price to book ratio for the most recent quarter is 1.19, whereas price to cash per share for the most recent quarter are 40.19. Its quick ratio for the most recent quarter is 1.30. Analysts mean recommendation for the stock is 2.00. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

Disclaimer: Any news, report, research, and analysis published on Alphabetastock.com are only for information purposes. Alpha Beta Stock (ABS) makes sure to keep the information up to date and correct, but we didn’t suggest or recommend buying or selling of any financial instrument unless that information is subsequently confirmed on your own. Information in this release is fact checked and produced by competent editors of Alpha Beta Stock; however, human error can exist.

Eddie A. New focuses on breaking news stories and ensuring we offer timely reporting on some of the most recent stories released through market wires about Healthcare Sector companies. He has formerly spent over 5 years as a trader in U.S. Stock Market and is now semi-stepped down. He works on a full time basis for alphabetastock.com specializing in quicker moving active shares with a short term view on investment opportunities and trends.

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