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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: $67.50
Nearest Support: $62.50
Catalyst: Takeover Rumors
Alternative drink company Monster Beverage (MNST) is getting a lot of attention today after the Wall Street Journal reported that Coca-Cola (KO) was in talks to acquire the company. The news spiked shares of MNST early in the session’s trading, but Coke disputed that it was making moves to buy Monster, shoving shares back down near opening levels before the session’s close.
Monster has been trying to shop itself out to a larger beverage company for years now, and Coke’s positioning as MNST’s distribution partner makes KO an obvious suitor. For now, though, it looks like shares of the energy drink maker are too pricey. At this point, Monster’s uptrend remains intact -- and ultimately the rumors could do a good job of getting acquisition attention on shares.
If nothing else, yesterday’s jump into the mid-$70 range gives Coke a glimpse at what kind of offer shareholders are expecting.
Barnes & Noble
Nearest Resistance: $26
Nearest Support: $20
Catalyst: Major Nook Investment
Book seller Barnes & Noble (BKS) is getting similar attention today, the result of a $300 million investment that Microsoft (MSFT) made in the new subsidiary that BKS created to control its Nook product and college bookstore businesses. The investment values BKS’ subsidiary at $1.7 billion -- more than the bookstore’s own market valuation right now.
The massive gap up in shares of Barnes & Noble adds a lot of uncertainty to the way this stock is trading from a technical perspective. For traders looking to take advantage of the activity in this stock, I’d strongly recommend waiting for BKS to test a more substantial support level before becoming a buyer.
Nearest Resistance: N/A
Nearest Support: $52.50
Catalyst: Positive Q1 Results
Cybersecurity company Sourcefire (FIRE) is up close to 12% today following positive first quarter performance. The firm earned 11 cents per share for the quarter, while analysts had only been expecting profits of 7.7 cents. The news is pushing FIRE to a new 52-week high today, a move that has big implications for bulls right now.
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 FIRE pushes above today’s high water mark.
Energy Transfer Partners
Nearest Resistance: N/A
Nearest Support: $49.50
Catalyst: Sunoco Purchase
Energy Transfer Partners (ETP) is getting its fair share of search volume today after the $11.3 billion MLP announced that it would be acquiring Sunoco (SUN) for $5.3 billion. The buyout dramatically expands ETP’s business from primarily a pipeline company, adding refining and chemical manufacturing to the stock’s repertoire. The news sent ETP close to 4% higher in yesterday’s session, pushing ETP to a new 52-week high.
From a technical standpoint, ETP’s setup is attractive for the same reason as FIRE’s is: new highs have good psychological effects on buyers. But there’s more to it than just that. Shares of ETP had been forming a complex inverse head and shoulders pattern since the start of February; yesterday’s breakout above the neckline adds another buy signal for shareholders.
With support close under foot, now’s a good time to be a buyer of ETF with a tight stop loss in place.
P.F. Chang's China Bistro
Nearest Resistance: N/A
Nearest Support: N/A
Catalyst: Going Private Transaction
P.F. Chang's China Bistro (PFCB) is on the receiving end of M&A news today, following news that Centerbridge Partners would be acquiring the casual dining chain for approximately $1.1 billion. Shares of PFCB are up close to 30% as a result of the news, as scores of investors pile in to grab gains from the transaction.
Typically, buyout deals catch a lot of attention, given that they result in large, nearly instant gains for shareholders. But for late-to-the-game buyers, there’s nearly no edge to be had from trading PFCB at this point -- particularly because the acquiring firm isn’t publicly traded (taking low risk merger arbitrage off the table).
Because the only major moves in this stock are going to be fundamentally driven at this point, do yourself a favor and stay away from shares of PFCB.
Nearest Resistance: N/A
Nearest Support: $33
Catalyst: Positive Q1 Earnings
Small-cap electronic component maker Veeco Instruments (VECO) is rallying hard today following positive first quarter results. Shares are up more than 15% this afternoon after stomping expectations: while analysts had only expected the company to earn 19 cents per share, Veeco actually pulled in 49 cents per share.
For traders, there are even bigger technical implications coming from this stock.
Much like ETP, Veeco is showing us the combination of new highs and a technical breakout. Today’s strong gap up pushed VECO above former resistance at $33, generating a buy signal for shares. While today’s trading range has been somewhat volatile, a close above $33 today followed by a second consecutive open above that level tomorrow morning is strong enough confirmation to consider buying shares.
I’d recommend putting in a stop just below $33.
Nearest Resistance: $20
Nearest Support: $17.50
Catalyst: Earnings, Gen-Probe Purchase
Last up today, medical diagnostics firm Hologic (HOLX) is down double-digits on the week following the one-two punch of an earnings miss and an acquisition that the firm is paying a premium for. While announcing a revenue shortfall yesterday morning, the firm announced that it was buying Gen-Probe (GPRO) at a 20% premium to the firm’s value last week. Mr. Market isn’t reacting well to that combination.
From a technical standpoint, the news broke HOLX down below previous support at $20, a price level that had held shares up since the start of February. With this stock unable to catch a bid at previous levels and the next nearest support level still a dollar and change away, it makes sense for bargain hunters to turn their sights elsewhere right now.
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.