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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 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 seven of the highest-trending stock searches on Google.
With earnings season kicking into full gear this week, you can bet that earnings is a major driver of searches today. Here’s a look at how these most-searched names are trading technically.
Nearest Resistance: $32
Nearest Support: $29
Catalyst: Earnings Miss
Barbie maker Mattel (MAT) is getting shellacked today after posting earnings that missed the mark by one cent for the first quarter of 2012. Mattel earned 6 cents last quarter, vs. the 7.3 cents that Wall Street analysts were expecting. Shares are down more than 9% in this afternoon’s trading.
But if you can believe it, the technicals are looking even worse.
Mattel is effectively in technical limbo, stuck between resistance way overhead at $32 and support at $29. That somewhat wide range means that MAT shareholders are going to wait a while before they get a clearer read on this stock’s likely price action.
In the meantime, this stock still hasn’t caught a meaningful bid. I’d recommend staying away for now.
Nearest Resistance: $14.50
Nearest Support: $13.50
Newspaper stock Gannett (GCI) is facing a similar fate, albeit under different circumstances.
Gannett actually posted positive earnings surprise this morning, turning out profits of 34 cents per share; Wall Street had only expected earnings of 30.9 cents for the first quarter. While newspapers haven’t exactly been the hot industry in recent years, the market’s reaction to GCI’s earnings speaks more to sentiment right now than it does to the firm’s results.
From a technical standpoint, shares broke down below previous support at $14.50 today, cracking a price level where shares had been readily able to catch a bid for the past few months.
As with Mattel, I’d recommend waiting for a more robust support level to get identified before becoming a buyer of this stock.
Gannett shows up on a recent list of 4 Value Stocks for the Contrarian Investor.
Nearest Resistance: $35
Nearest Support: $33
Banking giant Citigroup (C) is getting a lot of attention today, after posting first quarter numbers of its own. Citi earned 95 cents per share, falling more or less in-line with analyst estimates. Even so, shares are up close to 3% today on the news. Investors have been counting on horrific performance from the financial sector this quarter, so any decent numbers are spurring buying.
Citi’s chart is looking bullish right now, with shares forming a short-term ascending triangle, a pattern that’s identified by a horizontal resistance level above shares (at $35 in Citi’s case) and uptrending support below them.
The buy signal comes on a breakout above $35 resistance.
Nearest Resistance: $88
Nearest Support: $84
M&T Bank (MTB) is another banking stock that’s getting search volume this afternoon, after posting in-line earnings of $1.51 per share. M&T, one of four banks I still think are worth buying, is up around 1.3% following the release this morning.
Even though M&T is showing smaller gains than Citi today, this stock looks a lot stronger technically than its bigger rival does. Shares have shown off impressive relative strength in the last few months, and an if/then trade currently forming in shares makes M&T a high-probability trade on a breakout above $88 resistance. Broken support at $84 would normally make this stock a short candidate, but a clustering of support levels below that price makes this setup look significantly stronger to the upside.
Wait for that move above $84 before buying.
Nearest Resistance: $650
Nearest Support: $600
Catalyst: Technical Factors
Search engine giant Google (GOOG) is getting heavy search volume on its own site today, ostensibly because of fines levied from a privacy probe where Google apparently impeded and delayed the government’s investigation into data collection. In reality, I think that Google’s price action itself is the biggest reason for the searching – shares of the tech giant are down more than 2.5% today as other NASDAQ names like Apple (AAPL) sell off in kind.
Google could be looking a whole lot better from a technical standpoint. Shares made a rough double top around $660 back in early January and mid-March, a setup that would send a “sell” signal on breakdown below $570. While a clear direction is less evident now, with shares in between those two levels, the past couple days of selling don’t say much for GOOG’s ability to catch a bid.
It’s tempting to jump into a massive name like Google after a couple harsh days of selling, but for now, I’d recommend sitting on the sidelines.
Nearest Resistance: $56
Nearest Support: $54
Catalyst: FDA Information Request
Global health care company Baxter International (BAX) is down more than 6% this afternoon following the FDA’s request for more information related to its experimental HyQ immune system treatment. Small-cap drugmaker Halozyme Therapeutics (HALO) is down more than 22% on the news, but larger partner Baxter is the one getting the search volume from the news.
Even though Baxter is “only” down 6% and change, the gap lower at today’s open is a major technical breakdown for BAX. Again, this is one of those situation where it makes sense to wait for shares to find support before swooping in for a bargain.
As of the most recently reported quarter, Baxter was one of John Paulson's top holdings.
Nearest Resistance: $14.75
Nearest Support: $13.50
Last up today is Charles Schwab (SCHW), the $17.5 billion financial services stock that’s best known for its discount brokerage services. Schwab announced its first quarter earnings this morning, reporting earnings of 15 cents per share, profits that were right in-line with analysts’ expectations. Schwab is down approximately 1% following the firm’s earnings release.
Technically, Schwab is testing longstanding support at $13.50, a price that acted like a “floor” for shares as recently as early March. Even though SCHW has retraced quite a bit from its late March highs, it’s important to remember that those highs only got hit after the last time the stock bounced off of that $13.50 support level. Buyers should wait for a bounce off of support before buying this week.
Schwab shows up on a list 10 Stocks Boosting Little Funds to Big Returns.
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.