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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: $37
Nearest Support: $29
Catalyst: Industry Insanity
It's been quite a week for Potash (POT). Shares of the $26 billion firm are up 1% on high volume today after dropping more than 20% from Monday's open. The whole fertilizer industry is getting shaken up after Russia-based Uralkali ended a joint venture with Belaruskali that controlled around 43% of the potash market. With lower potash prices looking imminent, the whole industry is getting shellacked this week. POT is just one of the more high profile movers.
Today, shares of POT are trying to establish support on high trading volume. That level looks pretty strong at $29. With support so near by, and resistance well overhead and $37, August could be a good time to start building a position in POT. I'd recommend waiting for a more meaningful move off of $29 first.
Nearest Resistance: $6.80
Nearest Support: $5.60
Sprint (S) is getting a 6% shot in the arm this afternoon, following earnings numbers that forecast a return to subscriber growth after losing names for the last seven months straight. Despite taking a big hit from winding down its Nextel unit during the quarter, Sprint is looking stronger now that Japan's Softbank owns 78% of shares. Wall Street's reaction to the earnings release is evidence of that.
From a technical standpoint, there are probably more questions than answers on Sprint's chart. Shares are currently sitting in between resistance at $6.80 and support down at $5.60. Despite today's big boost, shares are still trading in the middle of that range. Until Sprint can resolve a direction, I'd recommend staying away.
Nearest Resistance: $16
Nearest Support: $14
Catalyst: Credit Rebuttal
Shares of retail giant J.C. Penney (JCP) are finding some buoyancy again after dropping double digits in yesterday's session. The trigger was news that commercial lender CIT Group was starting to cut off credit to some of Penney's suppliers -- a major vote of concern for JCP's ability to pay its bills. Management refuted the claims today, boosting shares by 2.5%. This stock is still down considerably on the week.
Penney's drop is less concerning than it would be if shares had dropped below an important technical level. Instead, $14 still looks like strong support in JCP. That's not to say that shares look especially bullish from here -- the stock is still in a downtrend since its May highs. Even so, it doesn't look like the floor is going to fall out from here.
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