Alibaba Group Holding Limited (BABA) Stock Moves Down and Here’s Why

Alibaba Group Holding Limited (NYSE: BABA) shares rose in early trading yesterday lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile in early trading, the Dow Jones Industrial Average DJIA, +0.31% rose 24 points, or 0.1%, to 19,883, while the S&P 500 index ESH7, +0.13% dipped less than 1 point to 2,268. The Nasdaq Composite COMP, +0.02% which reached its fourth-straight record close on Tuesday, rose 1 point to 5,553.

Shares of Alibaba Group Holding Limited (NYSE: BABA) were downgraded by analysts at Vetr Inc. in a note to their investors today. With a rating of Buy on the stock, Alibaba Group Holding Limited has a 52-week high of $109.87. The one-year price target of $120.67 is above the opening price of $96.92, that has caused a fair amount of other analysts to issue statements on the stock recently. Downgrades are more common when analysts believe that the future prospects for the security have weakened from the initial recommendation, often due to a considerable and major change in the company’s procedures, future direction or industry.

Shares of Alibaba Group Holding Limited (NYSE: BABA) opened at $96.92 yesterday trading between $96.75 and $97.45, and last traded at $97.04, which is a jump of $0.29 from the previous closing price.

Alibaba Group Holding Limited (NYSE: BABA) now has a market cap of 240.47B.

Alibaba Group Holding Limited (NYSE: BABA) Average Daily Trading Volume

1,578,917 shares traded hands yesterday, 89 percent below the norm, out of a total float 1,086,479,000. lower than normal. Look for trading volume to pick up in the coming days as investors often use upticks in trading volume to identify heavy volume accumulation or distribution by institutional investors.

While increased trading for one day will not mean much, however, 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 is defined by 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 investigate thousands of stocks. Thus, watching their interests is a good way to make sure you are buying the right stocks.

Alibaba Group Holding Limited (NYSE: BABA) 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 traders to make those trends work in their favor and increase the number of winning trades.

Trades for Alibaba Group Holding Limited (NYSE: BABA) have ranged from $59.25 – 109.87, and the stock now has a 50-day MA of $91.04 and 200-day MA of $93.90. Today’s last price is 11.68%% lower than the 52 week high of $109.87.

Earnings growth is an important factor to look at when investing in stocks and investors identify companies that have been successful at growing their earnings at least 25% or more for the past 3 years.

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