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3 Big Stocks to Trade (or Not) - views
BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.
From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.
Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.
While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.
These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.
Without further ado, here's a look at today's stocks.
National Bank of Greece
Nearest Resistance: $2.30
Nearest Support: $1.20
Catalyst: Fitch Upgrade
First up is National Bank of Greece (NBG), a stock that's up more than 14% as I write today after ratings firm Fitch upgraded it and a number of other Greek banks. NBG is approaching nearly three-times its normal trading volume midway through this afternoon. While the upgrade is promising from a fundamental standpoint, investors looking to dip a toe in NBG should think again: this stock is supremely volatile and fraught with headline risk right now.
NBG's chart is insane -- the $2 billion banking stock looks like a microcap in the middle of a pump and dump campaign right now. At this point, National Bank of Greece is plowing its way to new multi-month highs, but there's still considerable selling pressure in the mid-$2 range. With support far below NBG's current print, I'd recommend all but the most nimble traders avoid this name altogether right now.
Nearest Resistance: $19
Nearest Support: $17
J.C. Penney (JCP) is another name that's getting hefty trading volume today after the firm announced bigger losses for the first quarter. JCP's attempts to right itself -- including ousting CEO Ron Johnson after 17 months -- aren't working. The firm's current CEO says it'll take time to fix the firm's big problems, then again, longtime Penney shareholders have heard that one before.
Today's price action in JCP is pretty much meaningless. Investors are shrugging off the bigger loss, bidding down the stock 2.6% today. Support at $17 is going to be an important litmus test for this stock's ability to catch a bid -- a fall through that level would be a sell signal worth heeding. Bargain-hunters should wait for the stock to establish support.
Nearest Resistance: N/A
Nearest Support: $2.50
Catalyst: Technical Setup
Last up, shares of retail pharmacy chain Rite Aid (RAD) are up 3.5% this afternoon, buoyed by strong volume thanks to a bullish setup in the stock. RAD has been on fire for the last several months, rallying hard on the heels of improving fundamentals. Now, with support nearby at $2.50, today's breakout to new highs is providing a buying opportunity for shares.
Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses. Traders who aren't too risk-averse can enter a position here with a tight stop in place.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji.