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7 Hot Stocks on Traders' Radars - 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 makes a lot of sense as an investment tool, too. 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: $2.10
Nearest Support: $1.60
Pharmacy retailer Rite Aid (RAD) is getting traders’ attention today after the company released its fourth-quarter earnings to Wall Street this morning. While analysts had been expecting a 14-cent loss, the firm actually lost 18 cents per share.
The earnings miss isn’t having too bad of an effect on shares, though: RAD is getting propped up today by decent guidance for the year ahead as well as broad market strength.
From a technical standpoint, Rite Aid could be worse off. While shares have pulled back considerably from mid-March highs, this stock is finding support right now at $1.60, a price that just happens to converge with support at the 50-day moving average.
Buyers should wait for RAD to catch a more substantive bid off of $1.60 before taking a position in shares.
Rite Aid was also featured recently in "5 Stocks Set to Soar off Bullish Earnings."
Nearest Resistance: $27
Nearest Support: $26
Catalyst: Sale Rumors
News that online travel deal site Travelzoo (TZOO) was looking to sell itself sparked interest in shares yesterday, interest that’s carrying over onto TZOO’s search volume today. The possibility of a large premium from an acquiring firm had speculators piling into positions in the $427 million company. That caused Travelzoo to gap up hard yesterday, breaking the downtrend that had been ravaging its share price for the last two quarters.
A push above $27 resistance could help solidify TZOO’s most recent price action into an outright uptrend.
That said, trading this stock carries more headline risk than most of the other names on this list today.
Nearest Resistance: $54
Nearest Support: $48
Industrial supplier Fastenal (FAST) is another earnings-driven name today. This morning, the firm announced EPS of 34 cents per share, up 26% from last year’s earnings number. Those results were essentially in line with what analysts were expecting, and shares aren’t much changed this afternoon as a result.
Fastenal’s chart isn’t looking particularly strong right now. Shares hit resistance at $54 back at the start of April, and they’ve been moving swiftly lower ever since.
Traders should sit on the sidelines of this stock until it finds a more consequential support level.
Nearest Resistance: $10
Nearest Support: $8.50
Catalyst: Poor Q1 Guidance
Meanwhile, Avid Technology (AVID) is getting outright shellacked today following underwhelming revenue guidance numbers for the first quarter. Avid doesn’t actually announce its earnings until April 26, but those sales expectations are proving enough to get investors unloading shares of the video and audio editing software maker.
Buying pressure had been waning for a while in Avid; shares formed a descending triangle pattern for most of February and March, breaking down below then-support at $10 on today’s massive gap-down.
At this point, the supply-demand imbalance in AVID means that the higher probability trade is to the downside.
Avid shows up on recent lists of 10 Stocks Leading the Way in the Housing Recovery and 9 Stocks That Prove Dividends Make All the Difference.
Nearest Resistance: $13.60
Nearest Support: $12.50
Glass maker Apogee Enterprises (APOG) announced its fourth-quarter numbers after the bell yesterday, beating analysts’ profit estimates for the quarter, and hitting revenue expectations.
Despite the positive earnings numbers, shares are struggling to catch a bid today, down nearly 2% as I write. The wide range that shares have seen today indicates that there’s some investor ennui taking place in APOG -- but the technical picture is more telling.
Today’s price range (or, more precisely, the real body on the candle) has essentially spanned the gap from support at $12.50 to just shy of resistance at $13.60, which means that shares are still being obedient to the technicals.
I’d recommend waiting for APOG to exit that range, then placing a bet in the direction of the breakout.
Westinghouse Air Brake Technologies
Nearest Resistance: $78
Nearest Support: $74
Catalyst: Positive Guidance
Westinghouse Air Brake Technologies (WAB) -- better known as Wabtec -- is playing a more positive note in today’s session. The company is getting heavy search volume today after announcing that management expects first quarter earnings to come in at $1.20 per share, with full-year profits weighing in at around $4.80.
Investors are reacting well to the announcement, bidding Wabtec shares up by more that 6.5% this afternoon.
Wabtec is currently in the middle of an uptrend that’s rallied shares more than 28% in the last six months. From a technical standpoint, a break of $78 resistance would be a significant price move -- the last time buyers tried to put in a new high above that price, bids got overwhelmed by selling pressure as shareholders tried to take gains.
A move above $78 indicates that buyers are definitively in control; I’d wait until that happens before becoming a buyer.
Nearest Resistance: N/A
Nearest Support: $62.50
Last up today is Cytec Industries (CYT), a specialty plastics maker that’s getting search attention after announcing that it was planning to acquire UK aircraft component maker Umeco. Shares of CYT are rallying more than 12.5% on news of the acquisition, making a new 52-week high for the stock.
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, though, I’d recommend sitting on the sidelines until CYT pushes above today’s high water mark.
Cytec shows up on a list of Materials Stocks Bought and Sold by Hedge Funds for the most recently reported quarter.
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.