The Cheesecake Factory Inc. (CAKE) Stock Moves Down and Here’s Why

The Cheesecake Factory Inc. (NASDAQ: CAKE) shares rose on Thursday Nov 24 with lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, stocks opened flat this morning, struggling for direction in early trade ahead of congressional testimony by Federal Reserve Chairwoman Janet Yellen. Ahead of an appearance before the Joint Economic Committee, Yellen said an interest-rate hike could come “relatively soon,”

The S&P 500 SPX, +0.25% fell less than 0.1% to 2,176.85 while Dow Industrials DJIA, -0.05% fell 9 points to 18,858. The Nasdaq Composite COMP, +0.18% declined 0.1% to 5,291.48.

Shares of The Cheesecake Factory Inc. (NASDAQ: CAKE) were downgraded by analysts at Stephens in a note to their investors today. Stephens currently has a rating of Equal Weight on the stock. As a means of comparison, a number of other analysts have spoken on the stock in recent days, and The Cheesecake Factory Inc. has secured a consensus one-year price target of $54.10, a decrease compared to the opening price of $57.00. The Cheesecake Factory Inc. stock has a 52-week high of $60.16. Downgrades happen when analysts feel that the future prospects for the security have weakened from the original recommendation, usually because of an important and integral digression in the company’s operations, future outlook or industry.

The Cheesecake Factory Inc. (NASDAQ: CAKE) shares last traded at $56.98, which is a spike of $0.11 or 0.19% over the previous closing price. Opening at $57.00, they varied from $56.59 and $57.23 throughout the day.

The Cheesecake Factory Inc. (NASDAQ: CAKE) currently has a market cap of 2,702.56B.

The Cheesecake Factory Inc. (NASDAQ: CAKE) Average Daily Trading Volume

The stock’s average daily volume is 773,544 shares out of a total float 42,180,000 and some 127,489 shares traded hands yesterday, lower than the norm. Momentum traders often use increases in trading volume to identify large volume aggregation or dissemination by institutional investors, so trading volume is likely to increase in the next few days.

However, one day of significant buy side trading is not enough to determine a trend. So market traders will continue to watch for institutional sponsorship as a cue that financial institutions are moving forward.

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

Professional investors such as these retain substantial teams of analysts that investigate thousands of stocks. So watching their interests is a good way to make sure you are buying the right stocks.

The Cheesecake Factory Inc. (NASDAQ: CAKE) 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.

With that in mind, The Cheesecake Factory Inc. (NASDAQ: CAKE) now has a 50-day MA of $52.04 and 200-day MA of $51.01. It has traded in a 52-week range between $44.16 – 60.16 and today’s last price is 5.29%% lower than the 52 week high of $60.16.

Indeed, earnings growth is among the most crucial things to look at in regards to stock investing and, accordingly, investors watch for companies that have increased their earnings at least 25% or more over 3 consecutive years.

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