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Tickers in this Article: LXK, EZCH, QIHU, KLAC, ASML, PANL, SSYS
The morning has been bad for the market. The Nasdaq has fallen 0.1%; the S&P 500 is down 0.1%; and the Dow has decreased 0.1%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

The Technology sector (XLK) is currently lagging behind the overall market, down 0.2%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Lexmark International (NYSE:LXK)$1.34 billion+13.2%
EZchip (Nasdaq:EZCH)$933.2 million+7.5%
QIHOO 360 (NYSE:QIHU)$2.65 billion-7.1%
KLA-Tencor (Nasdaq:KLAC)$8.82 billion-3.5%
ASML Holding N.V (Nasdaq:ASML)$23.68 billion-3.5%
Universal (Nasdaq:PANL)$1.82 billion+3.4%
Stratasys (Nasdaq:SSYS)$1.32 billion+3.1%
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After a big jump of 13.2%, Lexmark International (NYSE:LXK) is trading at $21.51 per share. The company's volume for the day so far is 6.4 million shares. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. LXK has a debt-equity ratio of 45%, which is on the low side. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

After an increase of 7.5%, EZchip (Nasdaq:EZCH) has reached a current price of $35.81. So far today, the company's volume is 325,256 shares, 0.7 times the average volume over the last three months. In technical analysis, trading volume is used to determine the strength of a market indicator. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for EZCH is 3.86, indicating that the stock is trading for more than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies

QIHOO 360 (NYSE:QIHU) is currently trading at a share price of $21.34, a 7.1% decline. The company's volume for the day so far is 3.2 million shares. This is 0.7 times the current daily average. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for QIHU is 171.0, above the industry average of 6.73. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Find P/E And PEG Ratios

KLA-Tencor (Nasdaq:KLAC) is trading at $51.13 per share, down 3.5%. At 1.7 million shares, the company's volume so far today is. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. KLAC's PEG ratio of 1.0 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

ASML Holding N.V (Nasdaq:ASML) has fallen 3.5% and is currently trading at $56.01 per share. So far today, two million shares have changed hands. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The dividend yield is calculated by dividing a company's dividends per share by its stock price. ASML has a low dividend yield of 0.9%. This may indicate that the company's stock is overpriced. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Due Diligence On Dividends

Universal (Nasdaq:PANL) has moved up 3.4% and is currently trading at $40.60 per share. With 621,535 shares changing hands so far today, the company's volume is in keeping with its current three-month average. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for PANL is 20.08, which is relatively high. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Rising 3.1%, Stratasys (Nasdaq:SSYS) is currently trading at $63.95 per share. So far today, the company's volume is 263,030 shares. This is in line with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for SSYS is a low 19.1%. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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