A late round of buying erased early losses on Wall Street, leaving major indexes mixed at the close of trading Wednesday. Stocks had gotten off to a weak start as shareholders worried that growing costs for raw materials together with rising interest rates would hold back profit growth for U.S. companies.
The Dow Jones industrial average fell as much as 201 points in the morning as technology and healthcare companies declined and defense contractors stumbled after Northrop Grumman and General Dynamics released first-quarter reports. U.S. bond yields rose again, setting four-year highs. Oil prices, already at three-year highs, continued to climb.
Later in the day, energy companies got a boost after Exxon Mobil said it was raising its quarterly dividend. Retailers and industrial companies also rose. Smaller companies ended down, and most stocks on the New York Stock Exchange fell.
Stocks had tumbled Tuesday after companies counting Caterpillar, 3M and Sherwin-Williams said they were seeing higher costs and Caterpillar said it doesn’t expect to top its first-quarter earnings this year. On Wednesday, Goodyear Tire & Rubber fell 5.06% to $25.51 after it said higher raw materials costs and weaker demand hurt its business in the first quarter.
The Standard & Poor’s 500 index rose 4.84 points, or 0.18%, to 2,639.40 on Wednesday. Thanks to a big gain from Boeing, the Dow snapped a five-day losing streak and rose 59.70 points, or 0.25%, to 24,083.83. The losing streak was the index’s longest in more than a year. The Nasdaq composite slipped 3.62 points, or 0.05%, to 7,003.74. The Russell 2000 index of smaller-company stocks fell 2.81 points, or 0.18%, to 1,550.47.
In overseas markets, Germany’s DAX fell 1%. Britain’s FTSE 100 and France’s CAC 40 both lost 0.6%. Japan’s benchmark Nikkei 225 shed 0.3%. Hong Kong’s Hang Seng lost 1%, and the South Korean Kospi lost 0.6%. (Source: LA Times)
Top Pick for Thursday: International Business Machines Corporation (NYSE: IBM)
International Business Machines Corporation (NYSE: IBM) has grabbed attention from the analysts when it experienced a change of 0.26% in the last trading session to close at $145.94. A total of 7,280,436 shares exchanged hands during the intra-day trade contrast with its average trading volume of 5.16M shares, while its relative volume stands at 1.41. 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, International Business Machines Corporation (NYSE: IBM) stock is found to be 1.76% volatile for the week, while 2.02% volatility is recorded for the month.
The stock has a market cap of $138.04B and the number of outstanding shares has been calculated 945.90M. Based on a recent bid, its distance from 20 days simple moving average is -4.19%, and its distance from 50 days simple moving average is -5.49% while it has a distance of -3.96% from the 200 days simple moving average. The company’s distance from 52-week high price is -14.72% and the current price is 4.89% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 38.66 together with Average True Range (ATR 14) of 3.64.
Past 5 years growth of IBM observed at -4.00%, and for the next five years the analysts that follow this company is expecting its growth at 2.92%. The stock’s price to sales ratio for trailing twelve months is 1.72 and price to book ratio for the most recent quarter is 7.67, whereas price to cash per share for the most recent quarter are 10.96. Its quick ratio for the most recent quarter is 1.30. Analysts mean recommendation for the stock is 2.50. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.
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