During the recent trading sessions stock of Time Warner Inc. (NYSE:TWX) was gathering the crowd in the stock market. Many experts agree that the truth about a stock is best reflected in the way it moves on the chart. For this stock, the chart has a lot to say about future performance.
How has the stock performed recently?
Time Warner Inc. (NYSE:TWX) in the last month has decreased -0.61%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 427%. After the latest session, which saw the stock close at a price of $92.71, TWX sits below its 52-week high. Time Warner Inc. (NYSE:TWX) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that TWX may be headed in the future. In order to predict this, technical analysts look at momentum indicators, which measure the speed and magnitude of these price movements. The idea is that as momentum slows, it may signal the approach of key support or resistance levels and a reversal of recent trends. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for TWX is 47.25%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 57.13%, tells a similar story, and suggests that TWX currently trades in neutral territory.
What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. Time Warner Inc. (TWX) average trading volume of 12,840,564 during the past month is 166.04% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
What do the analysts think?
TWX is currently undervalued by -8.88% relative to the average 1-year price target of $101.75 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.60, which implies that analysts are generally neutral in their outlook for TWX over the next year.
How risky is the stock?
In order to put TWX’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
Time Warner Inc. (NYSE:TWX) has a beta of 0.98, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. TWX therefore has a below average level of market risk. During the past couple of weeks, TWX average daily volatility was 14.94%, which is 3.15 percentage points lower than the average volatility over the past 100 days.
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