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4 Tech 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 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: $5
Nearest Support: $2.25
Catalyst: New 52-Week Highs
Sprint (S) is topping our list today, turning out some massive trading volume early in this morning’s session after shares pushed into new 52-week highs for another day. While I’ve seen some attribution for today’s price action linked to an obscure SEC filing or two, the truth is that today’s 3.4% surge is 100% technical, and it's being brought on by the new high-water mark for this year.
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.
Resistance looks fairly strong at $5. If you’re not already a Sprint owner, I’d wait to see if S can catch a bid at $5.01 before buying.
For another take on Sprint, it shows up on recent lists of 5 Stocks Under $10 That Probably Won't Double in 2012 and 3 Winning Stocks to Sell for Profits.
Nearest Resistance: $18.50
Nearest Support: $17.50
Catalyst: Analyst Upgrades
It’s been a rough couple of quarters for Cisco Systems (CSCO). Shares of the IP networking firm have fallen more than 12% in the last six months, shoved lower by earnings misses and slipping sentiment among investors. But thanks to analyst upgrades at Goldman Sachs (GS) and Piper Jaffrey, the stock is finally getting some love again.
Shares are up more than 2% on the news, pushing their way into a void on Cisco’s price chart from where shares gapped down in May. While a tenuous grasp on newfound support at $17.50 is a good thing, investors should be looking at Cisco as a high-risk, limited-reward trade right now.
Earnings are slated for Aug. 15, an event that adds considerable risk to a Cisco trade right now. Sure, earnings could surprise Wall Street and shares of CSCO could soar; but that’s not a high-probability trade.
I’d avoid this stock until one shows itself.
For another take on Cisco, it shows up on a recent list of 5 Dividend-Paying Stocks for the Next Decade.
Nearest Resistance: $10
Nearest Support: $9
Windstream (WIN) is getting hit hard today, down close to 9% after the firm’s earnings release. While income was in-line with Wall Street analysts’ estimates, Windstream reported a pretty substantial decline in performance from the previous year, and investors are punishing the firm by selling off their positions.
From a technical standpoint, shares of WIN had been basing for most of the summer, making higher lows from the market’s correction that ended in June. Today’s massive move lower puts the kibosh on that shallow uptrend. Instead, shares are within a hair’s breadth of testing longstanding support at $9.
If shares slip below $9, this stock is a short candidate.
Windstream shows up on a list of 10 Highest-Rated Tech Stocks That Pay Big Dividends.
Advanced Micro Devices
Nearest Resistance: $4.50
Nearest Support: $4
Catalyst: Buyout Rumors
Yesterday, Advanced Micro Devices (AMD) rallied on a new set of buyout rumors. Today, shares are recovering from the optimism on high volume. After posting a big move higher in yesterday’s market session, shares are only giving back 1.14% today, sliding to $4.35 as I write. That suggests that while Mr. Market is discounting the rumors a bit, he’s not willing to ignore them at this point.
The rumors may be enough to make AMD complete a bottoming pattern, a welcome technical setup after shares have slid from prices above $8 in just a few months. A breakout above $4.50 resistance would complete a bullish tower bottom reversal pattern, giving traders a buy signal for shares.
Until that happens, hold off. Headline risk is pretty high in any name that has acquisition rumors swirling.
AMD shows up on a recent list of 3 Stocks to Sell if They Crash on Earnings.
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, 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.