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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: N/A
Nearest Support: $29
Catalyst: Technical Breakout
April has been a good month to be a Microsoft (MSFT) shareholder -- shares of the tech giant have climbed 14% since the first trading day of the month. A better-than-expected earnings release in the middle of the month sparked big buying in MSFT, breaking shares out above resistance.
This week, more eyes have been on shares after a hedge fund announced a discounted valuation was the reason for their $2 billion stake in MSFT. From a technical standpoint, new highs coming into shares today set the stage for higher ground in May.
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.
Nearest Resistance: $7.20
Nearest Support: $7
Catalyst: Bidding War
Sprint (S) has been getting plenty of attention from investors after Dish Network (DISH) announced a hefty $25.5 billion acquisition offer. The bid was designed to up the ante on a pending offer from Japan’s Softbank. And shares have been seeing heavy trading volume ever since.
Now Sprint is consolidating sideways. This stock is trading in a tight range thanks to the Dish offer right now, and it’s unlikely we’ll see a departure from that range for anything other than news on the deal. If you’re looking for a high-probability trade to make right now, look somewhere other than Sprint.
Nearest Resistance: $64
Nearest Support: $60
Meanwhile, Qualcomm (QCOM) is getting sold off this afternoon after mixed earnings announced last night rubbed Wall Street the wrong way. Even though earnings and revenues were up for QCOM, the firm’s forecasts for next quarter disappointed investors enough to bid down shares by nearly 6% today.
Technically, Qualcomm’s gap down is significant because it pushed shares down below their closest support level at $64. Now that level is likely to start acting like a price ceiling for shares. At this point, QCOM is sitting about halfway in between that newfound resistance level and its nearest semblance of support at $60.
If you’re looking for an entry in this chipmaker, I’d recommend holding out until QCOM gets closer to $60. Buyers should wait to make sure shares can still catch a bid at that level.
Nearest Resistance: $3.60
Nearest Support: $3
Catalyst: Earnings Forecast Miss
Another name that’s getting shellacked on high volume today is online gaming firm Zynga (ZNGA). Zynga reported great earnings numbers yesterday, earning a penny per share, vs. an expected 4-cent loss. But that beat isn’t enough to spare Zynga from the poor second quarter forecast that’s sending investors selling today. As I write, the Farmville maker is down more than 6.7%.
From a technical standpoint, Zynga is in make-or-break mode right now. ZNGA has been forming a head and shoulders top for the last few months, and today’s selling is pushing the stock down to test its neckline level right at $3. I’d be a seller on a move through that $3 level. If you decide to short ZNGA on a $3 break, I’d recommend keeping a protective stop just above the 50-day moving average.
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.