Advance Auto Parts Inc (AAP) Shares Slip, Investors Watching Closely, Here is Why

Advance Auto Parts Inc (NYSE: AAP) 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 today the Dow Jones Industrial Average DJIA, +0.19% rose 40 points, or 0.2%, to 19,929 while the S&P 500 SPX, +0.31% added 5 points to 2,275, a rise of 0.2%. The Nasdaq Composite Index COMP, +0.53% climbed 19 points, or 0.3%, to 5,567.

Shares of Advance Auto Parts Inc (NYSE: AAP) were downgraded by analysts at Bank of America Corporation in a note to their investors today. Bank of America Corporation currently has a rating of Neutral on the shares. The one-year price target of $175.38 is higher than the opening price of $174.42, causing a number of other analysts to issue statements on the stock recently. Looking back over the last 52 weeks, Advance Auto Parts Inc stock has a high of $177.83. considerable and major changes in the company’s actions, future ision or industry can cause downgrades as the analysts consider that the future prospects for the security have weakened from the original recommendation.

Yesterday Advance Auto Parts Inc (NYSE: AAP) shares last traded at $175.24, a jump of $0.77 compared to the previous closing price. Opening at $174.42, they varied from $173.52 and $175.86 throughout the day.

Advance Auto Parts Inc (NYSE: AAP) currently has a market cap of 12.90B.

Advance Auto Parts Inc (NYSE: AAP) Average Daily Trading Volume

177,071 shares crossed the trading desk yesterday, 74 percent lower than the average, out of a total float 73,129,000. lower than normal. Look for trading volume to pick up in the coming days as momentum traders often use upticks in trading volume to identify heavy volume accumulation or distribution by institutional investors.

However, a single day of heavy buy side trading is not enough to assert a trend. As such, market traders will continue to watch for institutional sponsorship as a signal that financial institutions are moving forward.

Institutional sponsorship simply refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Institutional investors such as these have teams of analysts researching thousands of stocks, so it is good corroboration to see them taking a postion in a stock you are researching.

Advance Auto Parts Inc (NYSE: AAP) 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 investors to make those trends work in their favor and increase the number of successful trades.

Trades for Advance Auto Parts Inc (NYSE: AAP) have ranged from $131.59 – 177.83, and the stock now has a 50-day MA of $171.92 and 200-day MA of $159.25. Today’s last price is 1.46%% below the 52 week high of $177.83.

Earnings growth is a critical factor to consider when buying stocks and investors watch for companies that have increased their earnings at least 25% or more over the past 3 years.

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