- Side-Step the Selling With These 5 Big-Name Trades
- 3 Stocks Breaking Out on Big Volume
- 4 Stocks Rising on Big Volume
- 3 Stocks Spiking on Unusual Volume
- A Small Stocks to Play the Ukraine Crisis
6 Hot Stocks on Traders’ Radars - views
BALTIMORE (Stockpickr) -- Forget the traditional ways 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 traders who want a starting point in their analysis.
Today, we’ll leverage the power of the crowd to take a look at six of the highest-trending stock searches on Google.
With earnings season still managing to grab onto the headlines this week, you can bet that earnings names are dominating today’s list – and incidentally, so are small-caps. Here’s a look at how these most searched names are trading technically.
Nearest Resistance: $34
Nearest Support: $32
Catalyst: Bad Earnings, Guidance
Shares of apparel stock Guess (GES) are down big today on poor earnings numbers, halving their 2012 performance in just a single trading session. The firm posted a small decrease in earnings after the bell yesterday, but it was the colossal miss on guidance that caused shares to gap down so hard in this morning’s session.
The price action we’re seeing in Guess is an important reminder that a major fundamental shift can derail an otherwise attractive technical setup. (In fact, a technical setup for the stock was outlined yesterday in "5 Earnings Stocks Poised to Pop."
Shares of Guess broke out above $36 resistance late last week, after shares had been consolidating for weeks. But yesterday’s guidance shoved shares to open well below the bottom of that consolidation range.
At this point, it makes sense to stay away from shares until GES finds a more robust support level. Nearest support at $32 is pretty weak.
Nearest Resistance: $38
Nearest Support: $33
Catalyst: Bad Guidance
Vera Bradley (VRA), another of yesterday's short-squeeze plays, is another small-cap apparel stock that’s getting hammered today following bad guidance issued after yesterday’s closing bell. Even though VRA posted impressive revenue and profit numbers for this quarter, it was weak guidance that caused this stock to gap down at the open today.
Since February, VRA has been forming a broadening formation, a setup that’s bounded by diverging trend lines. A broadening formation indicates that price action is getting less predictable -- statistically, this setup is more likely to resolve lower than higher.
Sure enough, shares are threatening to break down through the lower trend line today. Now could be a good time to look at a short position in VRA. I’d recommend keeping a protective stop at the 50-day moving average.
Nearest Resistance: $125
Nearest Support: $117.50
Catalyst: Employee Op-Ed
Even staid Goldman Sachs (GS) is getting plenty of unwanted search attention today, the result of a New York Times op-ed piece by Greg Smith, until yesterday an executive director at the firm’s London offices. The article is scathing, arguing that the firm’s culture has shifted from a focus on making money for clients to one of making money off of clients.
Not surprisingly, that unwanted attention also fuelled selling in yesterday’s session.
The timing is significant for the Goldman article. That’s because shares of GS broke out above resistance at $122.50 on Tuesday, buoyed by the biggest rally of the year for the S&P 500 -- yesterday’s selling nixed the buy signal that came from that breakout.
At this point, shares are consolidating as investors figure out their next moves. While the op-ed isn’t likely to make a material impact on Goldman’s business, traders are obviously paying attention to it; so you should too.
Nearest Resistance: $46
Nearest Support: $42
Catalyst: Profit Miss
It’s been a good year so far for shares of AMC Networks (AMCX). The cable TV network owner has rallied more than 18% already in 2012, even if today’s price action is a bit of a black eye for shareholders.
The firm missed Wall Street’s profit expectations due to hefty marketing costs for new seasons of the firm’s flagship shows. Still, shares appear to have stabilized by the midpoint in the session, a factor that could spare AMCX from the fate of the other stocks we’ve looked at.
AMCX has been locked in a well-defined uptrend since the beginning of November, a good thing for bulls. Even though today’s 3.2% drop on earnings shoves shares back down to trend line support, the fact that this stock is holding support is critical.
It makes sense to buy AMCX on a bounce off of support.
AMCX, which shows up on a list of Consumer Discretionary Stocks Bought and Sold by Hedge Funds, was one of "8 Stocks Billionaire John Paulson Loves."
Nearest Resistance: N/A
Nearest Support: $32
Catalyst: Great Q3 Numbers
Not all of the news has been bad today. Children’s publishing company Scholastic (SCHL) is breaking out to new 52-week highs following glowing third quarter numbers that were released today. From a technical standpoint that new high in shares could have big trading implications in March.
Making new 52-week 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.
For late-to-the-game buyers, I’d recommend sitting on the sidelines until SCHL pushes above today’s high water mark.
Nearest Resistance: $17
Nearest Support: $15.50
Catalyst: German Drug Ruling
Small-cap drugmaker InterMune (ITMN) is another name that’s rallying hard today, moving higher off of news that Germany’s Federal Joint Committee decided ITMN’s lung disease drug, Esbriet, offers additional benefits to patients. That ruling means that InterMune will be able to negotiate with healthcare providers over offering the orphan drug to German patients.
For traders, ITMN’s price action today is bumping shares against the $17 resistance level that’s acted like an upside barrier for the past several months. The firm’s combination of higher lows and horizontal resistance makes this setup an ascending triangle, a bullish pattern that becomes buyable once resistance has been broken.
I’d recommend going long if ITMN can hold above $17. When that happens, it makes sense to keep a protective stop just under the 50-day moving average.
To see these stocks in action, check out the at Most-Searched 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.