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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.
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. >>5 Dividends in Peril Right Now 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 a week away. And when there’s a big catalyst, there’s often a trading opportunity.
Without further ado, here’s a look attoday’s names.
Nearest Resistance: $9.60
Nearest Support: $8.75
Catalyst: Redemption of Trust Securities
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Meanwhile, Bank of America (BAC) is having a good day today. Shares of the big bank are up nearly 2% after announcing that it would be redeeming $5.13 billion in trust securities, income investments that banks have historically issued to build their Tier 1 capital. New regulatory changes have made trust securities a less attractive deal for banks, so BofA’s decision to redeem the securities is good news for investors. It means that BofA isn’t paying out interest rates as high as 7.83% anymore.
From a technical standpoint, Bank of America looks interesting as well. While shares hit resistance in early September at $9.60, shares have recovered for the last month, setting up for another attempt at taking out that $9.60 resistance level.
While I’m not a big fan of the big banks for fundamental reasons (namely black-hole balance sheets), traders may want to jump into BAC if shares break out above $9.60.
Bank of America also shows up on a recent list of 10 Most Profitable Banks Trading Below Book Value. Citigroup
Nearest Resistance: $38
Nearest Support: $35
Catalyst: Technical Setup Citigroup (C) is one of those stocks that makes a perennial appearance on the list of the most active stocks out there. But even though big news isn’t sparking a wave of buying and selling in Citi today, the technical setup that we’re seeing in shares is worth talking about right now.
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From a technical standpoint, Citigroup looks a whole lot like Bank of America – not a huge surprise since they’re two very comparable companies in the same industry. The big difference with Citi is that this stock broke out above its corresponding resistance level today, putting the stock a step ahead BofA. The breakout means that buyers are in control of Citi here.
While I’d offer the same caveat about buying C that I did for BAC, this stock looks like a good near-term upside mover.
Citigroup also shows up on a recent list of 3 Banks Running Out of Steam From UBS. Avon Products
Nearest Resistance: $21.50
Nearest Support: $16.50
Catalyst: Board Change
Finally, Avon Products (AVP) is up close to 6% as I write, following news that former CEO Andrea Jung would be stepping down as executive chairman of Avon’s board. Shares fell hard and profits declined during Jung’s time as CEO, and many investors felt that her presence as executive chairman of the board meant that Avon wasn’t giving its old approach a clean break. While her exit as a board member at the end of the year is a big shift, Jung will continue to be a special advisor to the board starting in 2013.
From a technical standpoint, this stock looks attractive. Shares have been basing for most of the last few months, and following today’s break higher, shares are much closer to support than they are to resistance. That tips the risk/reward in favor of buyers in October. For folks who decide to buy, I’d recommend keeping a protective stop nearby.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
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Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.