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3 Hot 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.
Nearest Resistance: $3.20
Nearest Support: $2.77
Catalyst: Major Share Sale
Retail pharmacy chain Rite Aid (RAD) is getting hefty trading volume in today's session after news that Canadian pharmacy retailer Jean Coutu Group unloaded 72.5 million shares of RAD according to a filing with the SEC. The Canadian group has been Rite Aid's biggest shareholder since a deal between the two firm that closed in 2007. After the sale, Coutu retains a large ownership stake in Rite Aid.
Despite the hefty selling pressure, RAD is holding up well from a technical standpoint. Shares fell down to the 50-day moving average as the broad market corrected over the last couple of weeks, but that average has held up as strong support in the last few sessions.
Traders looking for an entry opportunity in RAD should buy the next thrust off of the 50-day. Just keep a tight stop in place if you do.
Nearest Resistance: $18
Nearest Support: N/A
Catalyst: Ratings Cut, Gold Spot Price
Barrick Gold (ABX) remains the go-to equity proxy for everyone's favorite precious metal in this market. Gold prices have gotten shellacked in the last few months, down more than 26% year-to-date. And Barrick shareholders with they saw similar price performance in 2013: the gold miner is down 57% over the same time period. More recently, some of that selling has come as the hands of an analyst downgrade from Credit Suisse that knocked the firm's rating from outperform to neutral.
Technically, ABX has a broken chart. There's no semblance of support for Barrick, and lower levels look likely -- even if shares are bouncing modestly today.
I'd recommend staying away from the long-side of Barrick right now. Gold looks like it's going to settle lower.
Nearest Resistance: N/A
Nearest Support: $9.40
Catalyst: Technical Setup
Meanwhile, the exact opposite setup is shaping up in regional bank Regions Financial (RF). Regions has been in an uptrend for all of 2013, enjoying leadership alongside the rest of the financial sector. And shares of the firm are breaking out to new highs today after taking out resistance at $9.40. Now that level is support.
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.
Risk-tolerant traders 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