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4 Hot 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: $55
Nearest Support: $45
Catalyst: S&P 500 Inclusion
Facebook (FB) is up 2% on high volume this morning, following through after news of the social network's upcoming inclusion in the S&P 500. With a market capitalization of $128 billion, Facebook is about 50 times bigger than the big index's smallest components. To some extent, being included on the S&P is a buyable news item it means that index funds that track the big collection of around 500 stocks will be forced to start buying up shares of FB.
From a technical standpoint, Facebook's price action looks pretty strong right now. Shares found support down at $45, which means that if they can continue to catch a big above previous resistance at $55, we've got another buy signal in this stock.
I'd suggest waiting to see how $55 holds up before buying.
Nearest Resistance: $84
Nearest Support: N/A
Catalyst: Tronox Bankruptcy Ruling
Shares of oil and gas E&P Anadarko Petroleum (APC) gapped down on high volume this morning. The selling was triggered by yesterday's court ruling that Anadarko was on the hook for as much as $14 billion in environmental clean-up costs from its spinoff of paint materials company Tronox. Anadarko is off more than 8% this afternoon following the judge's decision.
There's no two ways about it: APC's chart is broken right now. Today's selling knocked buyers on their backs, putting Anadarko within a couple dollars of a new 52-week low. If you're looking for a bargain entry in APC, wait for shares to establish meaningful support first.
Nearest Resistance: $20
Nearest Support: $18.50
Catalyst: Share offering
Waster recycling firm Darling International (DAR) is down more than 5% this afternoon following news that the firm would be offering 40 million shares of common stock at $19, a move designed to raise capital to pay for a planned acquisition. While investors took the news well (the acquisition should be accretive to DAR's business, after all), shares traded down to the offering price.
If you own Darling right now, this might be a good opportunity to get out. That's because DAR is currently forming a head-and-shoulders top, a bearish setup that indicates exhaustion among buyers. While support exists at $18.50, it's weak enough to get taken out on the next round of selling. Buyer beware.
Nearest Resistance: N/A
Nearest Support: $45
Catalyst: RBC Capital Note
Shares of Twitter (TWTR) are enjoying some solid upside this afternoon, after a note from RBC Capital indicated that Twitter's advertising customers were experiencing ROI improvements as a result of the micro-blogging platform's services. The news points to increased use of Twitter as an advertising platform, and shares of the site are up 3.75% this afternoon as a result. That's good enough to push shares to new highs.
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.
If you decide to take the trade, I'd recommend keeping a tight stop in place.
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