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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 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 seven of the highest-trending stock searches on Google.
Here’s a look at how these most searched names are trading technically.
Nearest Resistance: $51
Nearest Support: $49.50
Catalyst: Acquisition, Analyst Upgrade
SBA Communications (SBAC) is getting attention from searchers today following the early closure this week of the firm’s Mobilitie acquisition, a deal that adds more thatn 2,300 cellular tower sites to SBA’s balance sheet. It’s also generating attention for Wall Street -- Morgan Stanley increased its revenue estimates for the firm following the buyout.
That positive sentiment is putting SBAC shareholders in prime position to continue cashing in on this stock.
SBAC has been locked in an uptrend for most of the last year, bouncing off of trend line support four times since October. The fact that SBAC is able to catch a bid at that trend line support level is critical -- it creates a low-risk opportunity for investors to buy on the next bounce off of that level. With shares staging a modest leg up today, now looks like as good a time as any to be a buyer in SBAC.
Bed Bath & Beyond
Nearest Resistance: N/A
Nearest Support: $67.50
Catalyst: Positive Earnings
Shares of retail housewares chain Bed Bath & Beyond (BBBY) is certainly living up to the last part of its name -- the stock is up more than 7% today following earnings that stomped Wall Street’s expectations. Profits for the year climbed 32% to $4.06 per share, spurring investors to pile into shares today.
From a fundamental standpoint, this stock has a lot going for it, but things aren’t looking too shabby from a technical analysis view either.
Today’s gap up in BBBY caused a breakout above former near-term resistance at $67.50, a price that’s now acting as shares’ nearest support level. More significantly, it pushes this stock to a new 52-week high. 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.
For late-to-the-game buyers, I’d recommend sitting on the sidelines until BBBY pushes above today’s high water mark.
Nearest Resistance: $15.50
Nearest Support: N/A
Catalyst: Wrecked Earnings
Communications equipment maker Polycom (PLCM) is getting shellacked today following a major miss for the firm’s first quarter earnings. As of this writing, shares are down more than 17% on the firm’s top- and bottom-line numbers. And the impact isn’t likely to be relegated to today’s session.
The massive gap down in shares today shoved PLCM to within a few cents of testing its 52-week low this morning, a move that’s negative for the exact same reasons that BBBY’s new highs are bullish.
Some investors may see the selloff in PLCM as an opportunity to pick up shares a whole lot cheaper than they were at the start of the week. Those buyers would be well advised to wait for this stock to find support before entering a position.
Nearest Resistance: $35
Nearest Support: $33
CarMax (KMX) is another name that’s getting a lot of search volume on the heels of earnings this afternoon. The firm posted profits of 41 cents per share, essentially falling in-line with analysts’ estimates for the fourth quarter. The market’s reaction is uninspiring -- shares are down almost 2% following the earnings release. Slightly restated earnings for 2011 and 2012 are likely the culprit for the negative pressure.
From a technical standpoint, not a whole lot has changed in KMX following earnings. Along with the broad market, shares of CarMax have been consolidating sideways for the last couple of weeks, and today’s earnings results don’t change that.
This stock is still stuck between resistance at $35 and support at $33. Until that changes, I’d recommend sitting on the sidelines.
CarMax, which shows up on a list of Consumer Discretionary Stocks Bought and Sold by Hedge Funds, was also featured recently in "5 Earnings Stocks Poised to Pop."
Nearest Resistance: $83
Nearest Support: $77
Monsanto (MON) is another name that’s facing some investor ennui following the firm’s second quarter earnings release yesterday. Monsanto’s profits jumped by 19% to $2.24 per share in the second quarter, buoyed by strength in the soft commodity markets. While many other companies are worrying about inflation-induced margin squeeze, Monsanto is enjoying the benefits of being on the front-end of the agricultural growing cycle. And shareholders could soon be benefitting from the pattern that’s setting up in shares.
Right now, Monsanto is forming a rounding pattern with a breakout level at $83. A rounding pattern looks like it sounds -- it’s a setup that indicates a gradual shift in control of the market from sellers to buyers.
That said, don’t be early on the MON trade; I’d recommend waiting for $83 to get taken out before becoming a buyer.
Nearest Resistance: $33.20
Nearest Support: $31.50
Catalyst: FDA Recall Scare
News that the FDA was recalling heart pumps made by Thoratec (THOR) gave traders a major scare yesterday, and are spiking search volume for this stock today. In reality, the FDA recall isn’t a physical recall -- it’s merely a directive that the product will need to meet different specifications going forward. But the scary headline was enough to send shares crashing for a few minutes midway through yesterday’s session.
That doesn’t mean that THOR owners are out of the woods. Shares had been forming a bearish descending triangle for the last month and change. The pattern broke down through support in yesterday’s trading, sending a sell signal to traders who were paying attention. That technical setup makes downside a higher probability outcome for THOR in April.
Nearest Resistance: $23
Nearest Support: $20.50
Catalyst: Bad Earnings
These shareholders might need a drink. Wine company Constellation Brands (STZ) is facing a similar outlook this week, following a miss in the firm’s fourth quarter earnings call. Constellation posted a 63% reduction in net income for the quarter, prompting a 13% selloff in the stock as of this writing.
Things had been going well for Constellation in 2012. Shares had been locked in a solid uptrend since before the start of the year, and it looked like the firm was primed to post an even stronger change in trend. But today’s massive breakdown completely wiped out any demand for STZ that sitting under trend line support. At this point, traders need to wait for Constellation to catch a bid before it even makes sense to consider looking for value in this name.
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.