- 5 Stocks Rising on Unusual Volume
- 3 Tech Stocks Spiking on Huge Volume
- 4 Tech Stocks to Trade (or Not)
- 3 Big Stocks to Trade (or Not)
- 5 Stocks Setting Up to Break Out
7 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.
Nearest Resistance: $50
Nearest Support: $44
Catalyst: Analyst Downgrade
Oppenheimer downgraded shares of Teradata (TDC) yesterday, knocking the firm’s opinion on the $8 billion data warehousing firm down to market perform. While the market is absorbing the downgrade of Teradata in stride, it could be the last straw that takes out some of the 16.8% gains that shareholders have seen year-to-date.
That’s thanks in large part to a head-and-shoulders top that’s currently forming in shares of Teradata. The pattern, which indicates exhaustion among buyers, triggered on a break of TDC’s $50 neckline. Previous support of $44 looks like a strong target for this trade; keep a protective stop at $52 to avoid getting hit by a sudden change in market sentiment.
Nearest Resistance: $24
Nearest Support: $23
Catalyst: Strong Earnings
Tibco Software (TIBX) is bouncing hard today on strong earnings news, gapping significantly higher from the drop that shares took in yesterday’s session. The two large gaps surrounding yesterday’s trading points to a technical formation known as an “island reversal” in shares of Tibco -- a move that could send shares moving higher still into the final week of 2011.
That added buying pressure would be especially significant given the fact that Tibco has been stuck in a horizontal channel between $23 and $24 for half of December. A break above $24 would be a significant sentiment shift that points to a more sustained breakout in share price.
Until that happens, though, the 8.4% gain TIBX is seeing today isn’t a technically significant move.
For another take on Tibco, check out today's "7 Stocks Spiking Higher on Big Volume."
Nearest Resistance: $35
Nearest Support: $30
Catalyst: Acquisition News
One of today’s biggest movers is Akamai Technologies (AKAM), a mid-cap content delivery network that’s up more than 18% on news that it’s acquiring a small mobility-focused CDN company called Contendo. Investors are excited that the purchase (however small) signals Akamai’s plans to embrace new trends in cloud computing.
Akamai’s rally today is also significant -- it’s pushed shares through previous long-standing resistance of $30, flipping that price into a support level. That buying pressure should put Akamai on track to test $35 resistance.
This stock’s relative strength has been stellar for most of the last quarter; there’s a high probability that we’ll see that relative strength continue into 2012.
Nearest Resistance: $31.50
Nearest Support: $27
Catalyst: Earnings News
Used car giant CarMax (KMX) is another name that’s getting heavy search volume today following yesterday’s earnings release. While the stock’s moves aren’t as material as some of its earnings-driven peers, CarMax is presenting traders with an actionable setup worth watching right now.
Since the start of October, CarMax has been locked in between support at $27 and resistance at $21.50, bouncing off of those levels three times during the course of the fourth quarter. That horizontal channel is setting up what’s known as an “if/then trade,” a contingent setup that’s determined by the direction the KMX breaks out.
It works like this: If KMX breaks out above resistance at $31.50, then buy. If shares break down below support at $27, then CarMax is a short candidate.
Nearest Resistance: $35
Nearest Support: $32
Catalyst: Earnings News
Walgreen (WAG), the nation’s largest pharmacy retailer, announced its first quarter earnings for fiscal 2012, and as with CarMax, the company isn’t making sizable moves today -- instead, it’s another if/then trade that investors should be keeping an eye on.
In Walgreen’s case, the price levels to watch at $32 to the downside and $35 to the upside. A bullish breakout would be the more preferable of the two because resistance is better defined (and thus easier to trade unambiguously). Walgreen’s 14-day RSI is currently trending higher, foreshadowing the possibility that we’ll see shares break out above $35.
Ultimately, it’s crucial to wait for price action to play out before making a move on this name. Whichever way this trade pans out, I’d recommend putting a protective stop just back within the channel.
Bed Bath & Beyond
Nearest Resistance: $63
Nearest Support: $57.80
Catalyst: Earnings Miss
Shares of Bed Bath & Beyond (BBBY) are getting hammered today following an earnings release that fell short of analysts’ estimates. Bed Bath & Beyond has been a Wall Street darling for most of this year, delivering gains of more than 17% since the start of January as the company churned out quarter after quarter of solid results in spite of consumer spending softness.
But a trend line break is threatening that status going into 2012.
Bed Bath & Beyond broke down below its trend line support level at today’s open, a move that’s ostensibly bearish for shares. At this point, BBBY is testing support at its more recent swing low of $57.80 -- shares are still holding at that level at this point. A break below it would signal BBBY as a near-term short candidate.
Nearest Resistance: $22
Nearest Support: $19.50
Catalyst: Earnings Miss
Finish Line (FINL) is another name that’s getting negative attention following earnings new today. The key difference in Finish Line’s case is the stock’s technical outlook; shares are still looking bullish right now in spite of a 3.7% intraday selloff.
With resistance at $22, Finish Line is currently forming an ascending triangle setup, a bullish formation that’s marked by a horizontal resistance level and uptrending support. We’ll want to see that $22 level get surpassed before buying Finish Line becomes a high-probability trade.
If and when that happens, I’d recommend keeping a protective stop at 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.