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.
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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. And when there’s a big catalyst, there’s often a trading opportunity.
Without further ado, here’s a look at four of today's most actively traded stocks.
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JPMorgan Chase
Nearest Resistance: $36.85
Nearest Support: $35
Catalyst: Growing Trading Loss
Shares of JPMorgan Chase (JPM) are getting hammered today, slammed more than 4% lower as I write, on news that the banking behemoth could be looking at a loss closer to $9 billion than the $2 billion first announced by CEO Jamie Dimon. The trading losses have been a fiasco for JPM, whose CIO got the axe after Dimon announced that the firm made some critical errors in measuring risk on some massive hedges that had been put on by traders in London.
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Right now, JPM is trading very close to $35 support following the selloff in shares that started at this morning’s open. Shares have been consolidating sideways for the last seven sessions, bleeding off some overbought momentum after a near-term rally that started in the first week of June.
I’d recommend buyers stay away from JPM’s newfound “bargain status” unless shares can crack resistance at $36.85.
I also featured JPMorgan recently in "5 Big Financial Stocks to Buy in June."
Bank of America
Nearest Resistance: $8.25
Nearest Support: $7.50
Catalyst: JPM Sympathy Trade
Bank of America (BAC) is getting attention as a JPMorgan sympathy trade today, down around 2% as of this writing. Sympathy trades are the name given to other popular stocks in a given industry that react to the news of a peer -- the logic is that if JPMorgan can flub a critical hedge, then so can firms like Bank of America. With the risks of that sort of screw-up slightly higher today, investors are selling shares of BAC.
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Like JPM, Bank of America has pushed higher in June, and has been pulling back more recently. While the consolidation in this stock isn’t as attractive as JPM’s, today’s selloff isn’t as ugly either -- call it a wash. BofA has been making higher lows since May 21.
Until that changes, and $7.50 support gets broken, investors should be cautiously optimistic about BAC.
Bank of America was also featured recently in "5 Stocks Insiders Are Jumping Into."
Cisco
Nearest Resistance: $17.50
Nearest Support: $16
Catalyst: Analyst “Buy” Call, Product Announcements
Cisco (CSCO) is a perennial name on the market’s most active list, the result of being a high-profile stock with plenty of drama in the last year and change. Today, Cisco is getting trading attention on the heels of an analyst “buy” rating as well as new product announcements that signal renewed energy being poured into consumer products.
From a technical standpoint, Cisco is looking rough, coming near a new test of support at $16. The company has a history of brutal gap-downs that have cut the firm’s share price in half since 2007. I’d suggest going short if $16 support gets broken.
Cisco shows up on a recent list of 5 Stocks for an Oversold Market.
Microsoft
Nearest Resistance: $31
Nearest Support: $28.50
Catalyst: Surface Tablet announcement
Microsoft (MSFT) is another tech name that’s getting attention today, driven by the announcement of the firm’s Surface tablet, a new product designed to take on the dominance of Apple’s (AAPL) iPad. The decision to offer up a more computer-like tablet that doesn’t run just Microsoft software but also its own hardware is catching investors’ attention -- and for good reason.
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Still, technically, MSFT isn’t looking particularly strong at this point; shares are stuck in a downtrend at the moment, and a test of support looks more likely than a breakout above resistance right now.
I’d recommend staying away from speculating about the success of MSFT’s new product until one of those levels gets breeched.
I also featured Microsoft, one of Ken Fisher's holdings, recently in " 5 Big Stocks Ready to Slingshot Higher."
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.
