3 Big-Volume Stocks You Should Stay Far Away From

These stocks are seeing increased trading volume today. Here's how to trade them now.
By Jonas Elmerraji ,

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 investors who want a starting point in their analysis.

Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market.

ZS Pharma

  • Nearest Resistance: $89.50
  • Nearest Support: $89
  • Catalyst: Acquisition

$2.2 billion pharmaceutical stock ZS Pharma (ZSPH)  is up almost 41% this afternoon, exploding out of the gate this morning on news of an acquisition by AstraZeneca (AZN) - Get Report . Astra will pay $90 per share for the smaller pharma firm, offering investors a huge premium from yesterday's closing price.

With the news out in the open, the money has already been made on the ZS Pharma trade at this point. Late-to-the-game traders should look elsewhere for high-probability trading opportunities.

Iconix Brand Group

  • Nearest Resistance: $9.50
  • Nearest Support: N/A
  • Catalyst: Restatements, Forecast Cut

Apparel brand company Iconix Brand Group (ICON) - Get Report  is getting crushed this afternoon, down more than 54% as I write following the announcement that the firm would need to restate 2014 numbers and cut its sales forecasts for 2015 due to weakness in menswear sales.

From a technical standpoint, charts don't get much uglier than what we're seeing in Iconix here. Shares started off in a pretty rough downtrend this year, and they are violating key support after being cut in half today. Buyers should avoid the temptation to try and find a bargain in Iconix. Shares could have further to fall.

Men's Wearhouse

  • Nearest Resistance: $37.50
  • Nearest Support: N/A
  • Catalyst: Forecast Cuts

Men's Wearhouse (MW)  is another apparel stock that's getting decimated this afternoon. The billion-dollar menswear retailer is down more than 44% on huge volume this afternoon, following big guidance cuts. The firm's Jos. A Bank unit is seeing serious sales declines after trying to walk back its deep discounts -- and the company now expects same store sales to plunge as much as 25% now as a result.

No doubt about it, Men's Wearhouse's chart is broken at this point. Until shares can establish some semblance of support again, buyers should stay far, far away from shares.

Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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