4 Stocks Trading on Big Volume -- and What to Do With Them Now
Bloomberg News
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.
U.S. Oil Fund
- Nearest Resistance: $16
- Nearest Support: $13
- Catalyst: Crude Prices
A pretty quiet start to the post-Thanksgiving week is sending a lot of trading volume to shares of U.S. Oil Fund (USO) - Get Report , investors' best investible proxy for crude oil prices.
As crude has caught a bid at support in the second half of November, USO has been doing the same, hovering around $13 support. Long-term, USO looks like it's forming a double-bottom pattern, a bullish price setup that triggers a buy above $16 resistance. At this point, it makes sense to wait and see how this price pattern works itself out. A meaningful violation of $13 support could signal further downside this fall.
Vale
- Nearest Resistance: $4.50
- Nearest Support: $3.25
- Catalyst: CEO Focus, Commodity Struggle
Brazilian mining company Vale (VALE) - Get Report is down almost 5% this afternoon, pulled lower by an equity dip in Brazil, coupled with a long-term drag on commodity prices. News hit this morning that Vale's CEO, Murilo Ferreira, had stepped down from his role as chairman of Brazilian oil company Petrobras (PBR) - Get Report , a move speculated to be driven by the need to renew focus on Vale.
Meanwhile, Vale's downtrend is very much alive as we head toward December, with shares hitting new lows in today's session. Until buyers can muster the strength to break shares through the topside of their downtrending channel, Vale looks like a stock that's best avoided.
Barrick Gold
- Nearest Resistance: $8.25
- Nearest Support: 7
- Catalyst: Spot Gold
Gold prices are spurring upside in shares of $8.4 billion gold miner Barrick Gold (ABX) this afternoon. Shares are up more than 3% on big volume, a move that takes advantage of Barrick's positioning as a leveraged bet on gold prices. The good news for gold bulls is that this could just be the beginning for shares of this mining giant. Technically speaking, Barrick's price action looks bullish in the long-term.
After selling off hard since the beginning of the summer, Barrick is finally looking "bottomy," thanks to an inverse head and shoulders pattern. The buy signal triggers with a breakout above $8.25 resistance. Barrick doesn't become a high-probability trade until that $8.25 price ceiling gets busted.
iShares MSCI Emerging Markets ETF
- Nearest Resistance: $36.50
- Nearest Support: $33.75
- Catalyst: Technical Setup
Finally, shares of the iShares MSCI Emerging Markets ETF (EEM) - Get Report are seeing big-volume attention this afternoon, as traders try to play catch up on what happened overseas during the Thanksgiving market reprieve here in the U.S. EEM has been under pressure for most of 2015, but shares are looking constructive from a technical perspective thanks to an ascending triangle setup.
Put simply, EEM becomes a buy with a move above $36.50 resistance -- and this big ETF is testing its support line in today's session, setting the stage for a move up to our price ceiling in December. While the dollar's strength continues to weigh on overseas stocks, EEM is the best way to play a potential turnaround story in 2016. But $36.50 needs to get taken out before EEM becomes a high-probability buy.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.