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4 Big 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: $18
Nearest Support: $16.50
Catalyst: Surprise Profit
A surprise first-quarter profit is spiking shares of communications stock Ciena (CIEN) today, with shares up 16% as I write this afternoon. Analysts had expected a net loss for the quarter, but the firm actually earned 12 cents per share. Ciena has already seen three times its normal daily volume halfway though Thursday’s market session.
Shares of Ciena had been consolidating sideways for the last quarter and change, but today’s massive gap up changes that. The move also puts $18 resistance within reach this month as the broad market pushes through to new highs. While risk is outsized right now in CIEN with shares so close to resistance, that tradeoff flips once resistance gets taken out. I’d recommend being a buyer on a move through $18.
Hertz Global Holdings
Nearest Resistance: N/A
Nearest Support: $20
Catalyst: New Highs
Rental car firm Hertz Global Holdings (HTZ) is another name that’s seeing extra trading activity today because of the new highs being hit in shares. The stock is up just 2% today, but the move is putting HTZ within grabbing distance of the all-time highs Hertz put in back in 2007.
How Hertz has been making those highs is important too. The stock has been trading in a tight range since November, bouncing within an uptrending channel. That channel gives us a high-probability range for HTZ’s price action. I’d recommend waiting for shares to bounce off of trend line support before trying to jump into this stock.
Nearest Resistance: $6
Nearest Support: $3.25
Catalyst: Share Offering
Shares of mortgage insurer MGIC Investment (MTG) are down 10% this afternoon following a well-timed $1.1 billion stock and bond issuance this week. Despite today’s decline, shares of MTG are still up more than 82% in the last month off the heels of a better-than-expected fourth-quarter earnings call. While the offering pulled the rug out from under the rally in shares, investors are still hanging onto the vast majority of their gains.
If they want to keep those gains, they’d be well-advised to sell now. MTG had a volatile rally into this month, and a decline could be just as swift. Today’s inability to even touch yesterday’s price action is telling that buyers have lost their control of shares. Now looks like a good time to be a seller.
Nearest Resistance: $35
Nearest Support: $27
Catalyst: Earnings Surprise
Navistar International (NAV) surprised investors after the close yesterday with a less-worse loss than expected. The news is sending shares of the truck maker up more than 25% as I write today. While analysts expected a loss of $1.76 per share, the firm only lost $1.42. That may sound like cold comfort, but in fact the loss is a huge improvement from the same quarter a year ago -- and investors are showing their appreciation with their dollars.
NAV is still well below its nearest significant resistance level at $35, a good thing for late-to-the-game buyers. If you’re looking for a chance to get into this stock, I’d just recommend giving it a chance to establish near-term support before jumping in.
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.