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4 Underwhelming Earners 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: $25
Nearest Support: $24
Catalyst: Mediocre Earnings
is trading slightly lower today after announcing mediocre third quarter earnings last night. Revenues for the quarter dropped more than 16% vs. the same quarter a year ago, and earnings dropped in kind. While the so-so results were largely expected by Wall Street (which is why shares are only off by a couple of points today), the news is prompting hefty volume in the big pharma firm. And from a technical standpoint, the small drop is having a big impact today.
That's because Pfizer formed a short-term head and shoulders top in shares that triggered on today's open. The head and shoulders indicates exhaustion among buyers, so it’s a bearish sign for this stock's price – and a signal that Pfizer's uptrend had ended. The fact that the technical setup is short-term helps to mitigate the downside in this stock. Bargain-hunting buyers would be well advised to avoid this stock until it can find meaningful support; even through Pfizer's dividend yield is tipping 3.6% now, the stock's price has given back much more than that in the last few sessions.
Nearest Resistance: $17.80
Nearest Support: N/A
Catalyst: Earnings Drop Digestion
Things are looking worse at Western Union (WU).
I'm not talking just in relation to Pfizer – things don't get much worse in the market than what we’re seeing at Western Union today. The big selling came yesterday, when poor earnings and a series of downgrades sent shares tumbling 29% by the closing bell. Today, shares attempted to bounce a bit, but are failing, dropping another 3% and change as I write. From a technical standpoint, the setup in WU should be sending a big caveat emptor signal to bargain-hunters in this stock. Western Union may look a whole lot cheaper today than it did last week – but it's headed even cheaper still.
Shares are making new 52-week lows today, a scenario that has big psychological implications for investors. The simplest way to think about 52-week lows is this: everyone who's bought the stock in the last year is sitting on losses right now. That means that “back to even” mentality is going to rule WU for a while. I'd recommend staying as far away from this stock as possible until that gets resolved.
Nearest Resistance: $39
Nearest Support: $32
Catalyst: Q3 Earnings Miss
The same can't be said about Barrick Gold (ABX) today. The Toronto-based gold miner is off more than 8% this afternoon following an earnings miss of more than a dime per share short of analysts expectations. More significantly, it’s shoving Barrick's price down below the stock's most recent swing low, a move that indicates weakening technicals. On a technical basis, Barrick has been the ugliest of the gold miners, trending lower even as peers showed signs of a bottom. For now, investors looking for exposure to the yellow metal should avoid this name.
Nearest Resistance: $37
Nearest Support: $30
Catalyst: Q2 Numbers, Downgrade
Finally, Cirrus Logic (CRUS) is another name that's down big today – the semiconductor firm is down around 9% as I write following earnings numbers. But the big difference is that CRUS' quarter was actually stellar. The selloff is more the result of investors' anxiety of a slowing growth trajectory (highlighted by an analyst downgrade today) than of any sort of earnings miss. While the decline is pretty large in CRUS, buyers aren't throwing in the towel just yet.
That's because CRUS has managed to catch a bid above its trendline support level, a move that means that the uptrend is still intact for this stock. After all, in spite of the pullback today, share are still up more than 133% year-to-date. With that in mind, it may be tempting to jump into shares here -- but I'd recommend waiting. Instead, hold out for a bounce off of support this week. That's an indication that enough buyers exist here at support to keep the rally afloat.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
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.