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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: $11.75
Nearest Support: $10.50
Catalyst: Analyst Downgrade, Citadel Sell
It seems like we haven’t heard a lot from E*Trade Financial (ETFC) lately. But that’s changing with today’s spike in trading volume -- more shares are trading hands today than any session in the last 12 months, an impressive feat. That’s thanks to news that the firm’s biggest shareholder, Citadel, is unloading its nearly 10% stake in ETFC. Couple that with an analyst downgrade, and you’ve got a recipe for a 6.4% drop this afternoon.
At least ETFC is down but not out. Shares of the online brokerage are still up more than 23% year-to-date, and a broad-based equity rally still stands to boost returns for the firm. That said, if shares crack their critical support level at $10.50, that means that demand is sapped, and it makes sense to be a seller.
Nearest Resistance: $14
Nearest Support: $13
Catalyst: Technical Setup
Ford (F) is another one of the most active stocks on the NYSE today, but it’s not due to any big news items in particular. The $52 billion car maker is one of a handful of perennial popular trading names. It’s worth noting that this stock is seeing pretty substantial call option volume this week, but it’s the technical setup in shares that makes Ford worth watching.
Ford spent most of the time since last fall rallying hard, only to correct just as hard down to $12 in February. But with shares on the upswing again, the Detroit automaker could be in store for a test of its $14 resistance level. If you’re looking for a shorter-term buying opportunity in Ford, I’d say go ahead and jump in; support at $13 offers some decent risk protection from here.
Nearest Resistance: $6
Nearest Support: $5.25
Catalyst: Board Shakeup
Meanwhile, independent oil and gas company Sandridge Energy (SD) is off by 4% today after a board shakeup that puts the firm’s CEO position on the firing line. Sandridge has been under fire in 2013, under performing the broad market much to the chagrin of major investors like TPG-Axon Capital. Well, the activist hedge fund managed to take four board spots in a move that looks likely to get CEO Ward. Even if today’s price action isn’t the remedy investors had hoped for, they could soon be in for a reprieve.
That’s because shares of SD are forming a bullish inverse head and shoulders pattern in the short-term. The inverse head and shoulders indicates exhaustion among sellers, and the shake-up could be sufficient to at least get sellers to hit the brakes. I’d recommend being a buyer on a move through $6.
Nearest Resistance: N/A
Nearest Support: $1.75
Catalyst: Comps Surprise
Finally, Rite Aid (RAD) is up nearly 4% today -- and 8% in the last week -- after the firm announced better than expected comparable sales for its stores. Rite Aid has been shellacked in the last year as deteriorating fundamentals sent investors fleeing, but now traders are getting a signal that the selloff was overblown. That puts shares within grabbing distance of new 52-week highs in March.
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. A 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. For late-to-the-game buyers though, I’d recommend sitting on the sidelines until RAD pushes above yesterday’s high water mark.
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.