Hot Stock's Trend Recap – Microchip Technology Incorporated (NASDAQ: MCHP) – Alpha Beta Stock

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Wall Street was back on shaky ground on Tuesday (March 27), with huge declines in technology shares leaving major stock indices sharply lower.

The tech-rich Nasdaq Composite Index dropped 2.93 per cent to 7,008.81.

The Dow Jones Industrial Average fell 1.43 per cent to 23,857.71, while the broad-based S&P 500 shed 1.73 per cent 2,612.62.

Analysts pointed to a cascade of negative stories surrounding leading technology names, including Facebook, Tesla Motors and Twitter.

“You’ve got large cap tech that led this downdraft,” said Art Hogan, chief market strategist at Wunderlich Securities.

“Once this market starts in a direction like this, you’re not going to see anybody step in and catch a falling knife.”

Tuesday’s losses set the market back on the red after Monday’s brief surge. Stocks also fell sharply on Thursday and Friday on worries about President Donald Trump’s trade policies, but those fears have receded somewhat in the last couple of days.

Facebook dropped 4.90 per cent as the social media company continued to face scrutiny over a customer data scandal. Chief executive Mark Zuckerberg turned down a request by British lawmakers to appear in Parliament but reportedly agreed to testify at a US congressional hearing.

Tesla slumped 8.22 per cent after the National Transportation Safety Board announced it was investigating a fatal crash last week involving a Tesla automobile in California.

Twitter dived 12.03 per cent after a report from Citron Research warned the company was vulnerable to a regulatory crackdown over its data privacy policies. Citron is known for placing bets on stock price falls.

Google parent Alphabet sank 4.57 per cent after a US appeals court revived Oracle’s lawsuit alleging that Google owed billions of dollars in damages over the search engine company’s use of Java programming language in its Android smartphone operating system. Oracle lost 2.37 per cent. (Source: Straits Times)

Top Pick for Wednesday: Microchip Technology Incorporated (NASDAQ: MCHP)

Microchip Technology Incorporated (NASDAQ: MCHP) has grabbed attention from the analysts when it experienced a change of -3.66% in the last trading session to close at $94.40. A total of 2,799,803 shares exchanged hands during the intra-day trade contrast with its average trading volume of 3.18M shares, while its relative volume stands at 0.86. 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, Microchip Technology Incorporated (NASDAQ: MCHP) stock is found to be 3.45% volatile for the week, while 2.96% volatility is recorded for the month.

Technical’s Snapshot:

The stock has a market cap of $22.72B and the number of outstanding shares has been calculated 240.67M. Based on a recent bid, its distance from 20 days simple moving average is -1.32%, and its distance from 50 days simple moving average is 2.40% while it has a distance of 7.16% from the 200 days simple moving average. The company’s distance from 52-week high price is -6.98% and the current price is 32.21% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 48.02 together with Average True Range (ATR 14) of 2.90.

Stock’s Valuation:

Past 5 years growth of MCHP observed at -15.20%, and for the next five years the analysts that follow this company is expecting its growth at 17.06%. The stock’s price to sales ratio for trailing twelve months is 5.85 and price to book ratio for the most recent quarter is 6.94, whereas price to cash per share for the most recent quarter are 20.66. Its quick ratio for the most recent quarter is 2.30. Analysts mean recommendation for the stock is 1.70. 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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