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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: $4.80
Nearest Support: $3.50
Catalyst: Technical Setup
Beleaguered cell phone maker Nokia (NOK) is getting plenty of investor attention today, and not for the best of reasons. The $13.7 billion firm typically sees big trading volume because of its conspicuous spot on the NYSE, but today, it’s getting some extra attention thanks to the technical setup in shares. While shares have made some auspicious upside progress in 2013, a reversal looks likely from here.
Nokia is forming a head and shoulders top, a price setup that indicates exhaustion among buyers. The neckline level for shares is $3.50, the stock’s nearest support level. If shares slip through there, I’d recommend unloading any long positions in NOK. Shares flirted with price in the high $3.50s today, so the breakdown may not be far off.
Nearest Resistance: $21
Nearest Support: $16
Catalyst: Earnings Miss
It’s a good thing J.C. Penney (JCP) changed its tagline from “Doing It Right” back in the 1980s, because the department store chain’s stock looks all kinds of wrong today. As I write, shares are down 15% on the day after JCP announced a worse-than-expected loss for the fourth quarter. For those keeping score (namely shareholders), that brings the stock’s losses in the last 12 months to 56%.
And it doesn’t look likely to get much better in the near-term. While shares spent the last few months consolidating sideways, today’s gap down effectively derails any semblance of progress in the battle between buyers and sellers. Support at $16 is going to be a key level to watch. A crack into the mid-teens would represent a generational low for shares of the retailer, and a big sell signal for traders.
Nearest Resistance: $23.50
Nearest Support: $21
Catalyst: Buyout Bid and Share Offering
It’s been an eventful week for small-cap industrial landlord CommonWealth REIT (CWH); shares of the trust have rallied more than 45% since Monday’s close. The catalyst? A buyout offer for $27 per share.
But there's more to the story than meets the eye. CWH snubbed the buyout offer by going forward with a share offering yesterday to raise $570 million. Management thinks they have more upside in pursuing strategic alternatives themselves rather than biting on the acquisition offer, and the $4 spread between CWH’s current price and the buyout price is the risk that they’ll fall short. If nothing else, this week’s drama puts a lot more eyes on this small real estate investment trust. While headline risk is still big for CommonWealth, I’d look at a move through $23.50 as a short-term buy signal.
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.