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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: $58
Nearest Support: $50
Catalyst: Guidance Miss
Despite the press release eBay (EBAY) put out after the close yesterday describing “Strong First Quarter 2013 Results,” Mr. Market isn’t impressed. Shares of the online auction site are down more than 5% as I write, retreating thanks to weak second quarter guidance. That guidance spurred a couple of downgrades from Wall Street, as well, sending weak hands flying for the the “sell” button.
EBAY gapped down this morning, but its price action could be worse. Today’s move isn’t threating the longer-term uptrend in shares since November, and strong support at $50 is closer than the firm’s closest resistance level at $58. Shorter-term, that should spell a decent risk/reward tradeoff once shares settle down.
Nearest Resistance: N/A
Nearest Support: $51
Catalyst: Earnings Beat
Telco giant Verizon Communications (VZ) is one name that’s actually enjoying some upside today. Shares of the $146 communications stock are up around 3.5% this afternoon after the firm topped analysts’ first-quarter earnings consensus by 3 cents. That buying pressure is breaking Verizon’s stock out to a new multi-year high today.
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. Investors who aren’t too risk-averse may want to consider buying here; if you’re looking to build a long position, I’d recommend a protective stop at $49 support.
Nearest Resistance: N/A
Nearest Support: $80
Catalyst: Earnings Beat
We’re seeing the exact same story play out in shares of PepsiCo (PEP) today. Shares of the snack and beverage giant are up 3.5% this afternoon after besting consensus estimates by 6 cents, and posting sales in line with analysts’ targets. Consumer non-cyclicals such as PEP have been on fire for the better part of 2013, and this fundamentally driven confirmation of higher highs in price bodes well for traders right now.
Pepsi’s breakout this afternoon is pushing shares up to a new all-time high. While gains-taking has tempered this stock’s high-water mark form this morning, now is still a good time to take advantage of PEP’s continuing momentum. Nearby support at $80 makes a good stop loss level.
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.