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4 Big Stocks on Traders' Radars - 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: $6.25
Nearest Support: $5
Catalyst: Technical Setup
Shares of beleaguered retailer J.C. Penney (JCP) are trading on big volume this afternoon, the after-effects of holiday sales reported earlier in the week. Penney has been sold off hard in the last few months, and now with shares testing a big round-number support level at $5, it's starting to get attention from bargain-seekers again.
That bullish sentiment may be misplaced though. From a technical standpoint, JCP's chart is still horrifying. Broken support at $6.25 is now resistance, and the downtrend is still very much in place. I'd suggest staying away from shares until they can catch a meaningful bid again.
Nearest Resistance: $75
Nearest Support: $50
Catalyst: Earnings Guidance Disappointment
3D printing stocks are off big today, after 3D Systems (DDD) gave guidance for its preliminary full year 2013 results. Shares of DDD are down more than 18% this afternoon after the firm announced that it expects earnings to fall in the 83 cents to 87 cents range, a level that's well below the 96-cent-per-share consensus. Like JCP, DDD is showing traders a broken chart, which means it makes sense to stay away.
DDD has spent the last three months forming a head and shoulders top, a bearish pattern that triggered on today's gap down below the pattern's $75 neckline. Now, a move to the next-lowest support level at $50 looks like the high-probability move. Shareholders shouldn't expect a reprieve from selling just yet.
Nearest Resistance: $55
Nearest Support: $52
Catalyst: Q4 Earnings
Drug giant Merck (MRK) is seeing high volume this afternoon after the firm posted its fourth-quarter numbers for investors. Merck reported earnings of 88 cents per share for the quarter, hitting analysts' consensus estimate. Shares are effectively trading flat this afternoon on the heels of the news, but the chart looks excellent right now.
MRK is currently in a textbook uptrend, having bounced off trend line support five times since November. The best time to be a buyer in MRK is on the next bounce off of support.
Nearest Resistance: $82.50
Nearest Support: $75.50
Catalyst: Q4 Earnings
Biopharmaceutical firm Gilead Sciences (GILD) is down around 3.5% this afternoon, following a fourth-quarter earnings call of its own. Gilead earned 47 cents per share, a number that missed the 50-cent earnings analysts were hoping for. Ultimately, the slight earnings miss doesn't matter much for GILD's upside potential. This stock is still bouncing higher in a textbook uptrending channel. And the best entry strategy remains to buy on a bounce off of support.
Health care continues to be one of the best sectors from a relative strength standpoint as this broad market corrects. So, in spite of today's dip, there's a lot to like about owning Gilead and its peers in February.
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