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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.
Nearest Resistance: $29
Nearest Support: $25
Catalyst: Earnings Beat
Up first is Facebook (FB). The $67 billion social network is up more than 3% on huge volume in this afternoon’s session after posting growth in mobile sales numbers for the first quarter. Wall Street had been expecting the firm to earn 13 cents per share in profit, but the 12 cents Facebook actually earned was enough to spark buying. Investors are also shrugging off stagnant user numbers after earnings.
From a technical standpoint, though, Facebook is looking a whole lot less bullish. Instead, shares are looking “toppy” thanks to a head and shoulders pattern that’s been forming for the last few months. A move down through $25 is the sell signal.
(For more on Facebook’s current technicals, check out “5 Huge Stocks to Trade in May”).
Brocade Communications Systems
Nearest Resistance: $5.40
Nearest Support: $5
Catalyst: Revenue Forecast Miss
Meanwhile, Brocade Communications Systems (BRCD) is getting sold off more than 7% today after releasing a second-quarter revenue forecast that came in shy of Wall Street’s expectations. BRCD cut its outlook on weak demand for its products, and that in turn is causing weak demand for its stock.
Technically, the breakdown in Brocade is more significant than the 7% shares are off today -- it plowed the stock through a couple of key support levels that had acted as price floors of sorts for shares up until now. At this point, BRCD looks likely to keep selling off. I’d recommend staying away until this stock can establish some semblance of support.
Nearest Resistance: $3.60
Nearest Support: $3
Catalyst: Technical Factors
Beleaguered handset maker Nokia (NOK) is drawing high trading volume today, no new phenomenon for the $12 billion Finnish tech stock. From a technical standpoint, Nokia’s chart looks ugly right now. The stock has been in a downtrend since early 2013, and that series of lower highs and lows looks unlikely to get derailed in the near-term. While $3 support has acted as a decent floor for shares in the past, I wouldn’t put too much faith in NOK’s ability to catch a bid at that level longer-term.
That doesn’t mean that I’d short the stock either. Headline risk remains a big factor in Nokia’s price action, as rumors of a white knight coming in to rescue the firm continue to pop up. If you’re looking to build a position in NOK, I’d at least recommend waiting for the downtrend to get broken first.
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
Follow Jonas on Twitter @JonasElmerraji