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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: $16
Nearest Support: $13
Catalyst: Surprise Profit
BlackBerry (BBRY) is seeing higher volume than usual today after the firm posted a surprise profit for the fourth quarter. While analysts on Wall Street had been expecting BBRY to lose 30 cents per share, the firm actually posted profits of 19 cents per share. The firm’s numbers were a bit of a mixed bag -- earnings beat on lower-than-expected sales. Still, shares are seeing a 2.4% rally in today’s trading session.
From a technical standpoint, BlackBerry is still looking “toppy.” Shares of the stock have been forming a longer-term head and shoulders top pattern for the last few months, and they’re getting closer to triggering a sell even in spite of today’s buoyant price action.
I’d recommend being a seller if BBRY drops below it’s most recent swing low of $13.
Nearest Resistance: $53
Nearest Support: $49
Catalyst: Secondary Offering
After posting its fourth-quarter earnings numbers on Monday, Dollar General (DG) is off by a point today after pricing its 30 million share secondary offering at a slight discount. The offering wasn’t a cash-raising measure for DG; instead, it was an exit strategy for some existing shareholders who were looking to reduce their exposure to the firm.
DG had been bouncing lower in a downtrend for the latter half of 2012, but shares flipped over into an uptrend at the start of 2013, sparking a buying opportunity for traders. The most important part of today’s price action is the fact that shares are still holding above trendline support. Until that changes, investors should look to buy the dips in DG.
RAIT Financial Trust
Nearest Resistance: $8.25
Nearest Support: $7
Catalyst: Share Offering
Shares of RAIT Financial Trust (RAS) are off by close to 3% today after pricing the firm’s 7 million share offering. The corporate action is making RAIT Financial Trust one of the most heavily traded names on the NYSE today. As a real estate investment trust, RAS is obligated to pass on the vast majority of its earnings onto shareholders. As a result, it’s dependent on fundraising efforts like share offerings in order to raise investment capital.
From a technical standpoint, RAS’ price action broke this stock’s otherwise bullish price action from the last month. An aborted bullish technical pattern is generally just as bad as an outright bearish one, and for RAS, that means that a dip to support at $7 looks likely. Buyers should wait for shares to re-establish support before jumping into a position in this stock.
Nearest Resistance: $25
Nearest Support: $20
Catalyst: Secondary Offering
The last trading session of 2013’s first quarter is proving a popular one for secondary share offerings -- Tumi Holdings (TUMI) is yet another firm that’s trading off by a few points today after pricing a 10.14 million share offering earlier in the week. Tumi is getting set to celebrate it’s one-year anniversary as a publicly traded company next month, but share aren’t exactly presenting a compelling buy signal right now.
That’s because shares have been trading in a sideways range since last August. With resistance at $25 and support sitting down below at $20, there isn’t a trade to be made on this name until shares exit the channel. Until then, I’d recommend sitting on the sidelines.
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.