7 Big Stocks to Trade for Big Gains

Here's a technical look at how to trade some of the most active stocks on the market right 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.

Micron Technology

  • Nearest Resistance: $13.75
  • Nearest Support: $12.25

  • Catalyst: Q3 Earnings

Leading off our list of high-volume stocks is $13 billion tech company Micron Technology (MU) - Get Report . Micron posted its third-quarter earnings results after the closing bell on Thursday, leading to a 9% selloff to end the week Friday. While Micron's loss for the quarter was better than expected -- an 8 cent loss vs. the 18.2 cents in the red that Wall Street was expecting -- analysts were bearish on Micron's outlook for the fourth quarter. That guidance was a big factor in Micron's selloff Friday.

The good news is that while Micron is down, it's not out yet from a technical standpoint. This stock has been in an uptrending channel since the start of June, and while shares sold off to the bottom of that channel with Friday's selloff, they didn't violate it. A bounce higher from here in the week ahead would be a buy signal.

VanEck Vectors Gold Miners ETF

  • Nearest Resistance: N/A
  • Nearest Support: $26
  • Catalyst: Spot Gold

The VanEck Vectors Gold Miners ETF (GDX) - Get Report  ended things on a strong note last week, rallying almost 5% on Friday in a move that brought shares to new 52-week highs.

GDX actually broke out above its sideways consolidation channel on the news of the Brexit vote, but shares have continued higher as the broad market rebounded. That breakout makes shares likely to kick off a second leg of the uptrend that started in the middle of January and was primarily responsible for sending shares of this stock up 112% year to date. Look for the likelihood of more upside for GDX in July.

Rite Aid

  • Nearest Resistance: $7.60
  • Nearest Support: N/A
  • Catalyst: Technical Setup

Shares of drugstore chain Rite Aid (RAD) - Get Report  broke down through an important support level at $7.60 last week, signaling the likelihood of lower levels ahead. Rite Aid is still a buyout target for Walgreens Boots Alliance (WBA) - Get Report  in a deal worth $9 per share in cash -- but shares trade for a large 23% discount to the offer price on worries that the deal will get added to 2016's list of failed mergers.

Technically speaking, the breakdown in Rite Aid is a bearish signal, but it could present a better buying opportunity for more opportunistic buyers pre-merger.

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Chesapeake Energy

  • Nearest Resistance: $5
  • Nearest Support: $4
  • Catalyst: Commodity Rebound

Volatile energy stock Chesapeake Energy (CHK) - Get Report  rallied more than 7% on big volume Friday, making it one of the most heavily traded issues on the NYSE.

The up move in Chesapeake was primarily driven by the similar uptick in energy commodity prices last week, but the size of Friday's move had a lot to do with the fact that Chesapeake was already at trend line support, a price floor that's been in place since May. From here, look for continued upside as Chesapeake bounces off of support. That said, risk-averse investors should sit this stock out in general.

iShares Silver Trust

  • Nearest Resistance: N/A
  • Nearest Support: $17
  • Catalyst: Spot Silver Prices

Silver has been breaking out this summer -- and one of the best ways to trade it is through the iShares Silver Trust (SLV) - Get Report . This $6.7 billion exchange-traded fund rallied almost 5% on Friday, alongside the up move in the precious metal.

From here, higher ground looks likely. Silver prices have been in an uptrend since the start of 2016, and momentum clearly isn't showing any signs of waning this summer. If you decide to jump on the silver trend through SLV, consider parking a protective stop at the 50-day moving average.

Harley-Davidson

  • Nearest Resistance: $55
  • Nearest Support: $47
  • Catalyst: Acquisition Rumors

Motorcycle giant Harley-Davidson (HOG) - Get Report  ended the week strong, rallying almost 20% on Friday following speculation that KKR was getting ready to make a $65 per share bid for the company. While the speculation is, at this point, just that, it was enough to spur commentators to make guesses on whether the deal is likely to happen -- and to put more private equity eyes on whether buying Harley-Davidson makes sense.

Meanwhile, the move was enough to break shares out to within grabbing distance of their 52-week highs. While there's still room to make money if the rumors are true, that's a big "if" for investors -- especially as we close in on Harley's second quarter earnings call at the end of this month.

Himax Technologies

  • Nearest Resistance: $8.50
  • Nearest Support: $7
  • Catalyst: Analyst Note

Last on our list of big-volume stocks is small-cap tech firm Himax Technologies (HIMX) - Get Report . Himax lost 9.44% on Friday, dropping on what Northland Capital Markets called "concerns that the augmented reality market may take a while longer to ramp up than earlier expected."

The technical story played a big role in Friday's Himax selling too. Shares broke through an important support level at $8.50 on Thursday, clearing the way for a more pronounced downside move on Friday.

The good news for Himax bulls is that support isn't far away at this point. Shares are closing in on a long-term price floor at $7. If shares are able to bounce off of $7, consider it a buying opportunity; otherwise, if $7 gets violated, look out below.

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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