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 and market data to figure out what 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 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, crowdsourcing works best as a starting point for analysis.
So, today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market.
Advanced Micro Devices
- Nearest Resistance: N/A
- Nearest Support: $14
- Catalyst: Technical Setup
Shares of Advanced Micro Devices (AMD) - Get Reportare enjoying a 5.9% rally this afternoon, boosted by a bullish technical setup that's been propelling shares higher since the start of 2016. Now, AMD is starting the week with a breakout through a minor resistance level at $14, a price move that clears the way for more upside in the weeks ahead. AMD's rally may seem extended at this point, but the technicals indicate that there's still time to buy for investors who want to ride this stock's momentum. If you get into AMD here, consider parking a stop on the other side of the 50-day moving average.
La Jolla Pharmaceutical Co.
- Nearest Resistance: $36
- Nearest Support: $28
- Catalyst: Phase 3 Results
Small-cap biopharmaceutical stock La Jolla Pharmaceutical (LJPC) - Get Report is up almost 75% as I write this afternoon, boosted by positive Phase 3 trial results for the firm's LJPC-501 study for patients with catecholamine resistant hypotension. The trial showed a 22% reduction in mortality risk for patients on the drug through day 28, fueling excitement as the firm plans on meeting with the FDA to discuss submitting the drug for approval in the second half of 2017. From a technical standpoint, shares of LJPC are in breakout mode here. Because of the size of the move, it makes sense to wait for any profit-taking to shake out before jumping into this trade.
VelocityShares 3x Inverse Natural Gas ETN
- Nearest Resistance: $9.50
- Nearest Support: $5
- Catalyst: Spot Gas Prices
The VelocityShares 3x Inverse Natural Gas ETN (DGAZ) - Get Reportis tipping the scales as one of the most actively traded stocks on the NYSE this afternoon, up more than 11% as spot natgas prices slide lower. DGAZ's leverage has made it a volatile play on gas prices, but that volatility has primarily been to the upside in recent weeks, thanks to a textbook inverse head-and-shoulders breakout that triggered on this ETN's move through $5 in the middle of this month. For traders who can stomach the volatility here, look for DGAZ to test new 2017 highs.
- Nearest Resistance: $7
- Nearest Support: $6.50
- Catalyst: Technical Setup
Department store retailer J.C. Penney (JCP) - Get Report is up 4.5% this afternoon, rebounding for technical reasons in spite of a downgrade from B. Riley. While the firm had previously held JCP as a buy, the store chain was cut to neutral, with a price target at $7.50, lowered from $12. That downgrade isn't proving to be enough to stop shares from bouncing higher this afternoon, though, as shares test a critical price floor at $6.50.
That $6.50 level was the stopping point for JCP's selling back at the end of January, and it's remaining technically significant in February. If shares can muster the strength to push up through $7.50 resistance, JCP triggers a pretty clear-cut buy signal. Otherwise, if JCP does end up materially violating $6.50 support, it opens up a lot more downside risk. Wait for one of those outcomes to happen before you take this trade.
- Nearest Resistance: $120
- Nearest Support: $100
- Catalyst: Analyst Update
Shares of NVIDIA (NVDA) - Get Report are getting a boost this afternoon, up more than 3% on big volume following Goldman Sachs reiterating its conviction buy rating for the firm. Goldman sees the recent pullback in NVIDIA as a buying opportunity, not a cause for concern, as growth rates in the firm's key markets remain steady.
Technically speaking, NVDA's price action supports that call. Shares are consolidating sideways between $120 resistance and $120 support following a monster-sized move in 2016, and more importantly, the uptrend that rallied shares higher last year is still intact here. A bounce off of that trendline is a strong buying opportunity in shares of NVDA.
- Nearest Resistance: $270
- Nearest Support: $215
- Catalyst: Analyst Downgrade
Goldman is also driving the price action in shares of electric car maker Tesla (TSLA) - Get Report, albeit in the other direction. Goldman cut its rating on Tesla to start the week, downgrading the firm from neutral to sell, and slashing its price target to $185 from $190. Tesla is down around 4% on high volume this afternoon.
Technically, the real sell signal happened a few sessions ago, when Tesla violated the uptrend that had been sending shares higher since December. That technical breakdown has a lot to do with the downside that's opening up from Goldman's ratings cut. From here, the next meaningful support level in Tesla is down at $215. Steer clear of shares until they can establish a series of higher lows again.
- Nearest Resistance: $13
- Nearest Support: $10.25
- Catalyst: Q4 Earnings
Last on our list of today's most active stocks is small-cap in-flight internet provider Gogo (GOGO) - Get Report, a stock that's rallying more than 18% as I write this afternoon, thanks to positive fourth-quarter earnings. Gogo lost 34 cents per share for the quarter, coming in ahead of the 44-cent loss that Wall Street analysts were expecting, on average. At the same time, the firm boosted its guidance based on higher-than-expected aircraft installations for 2017, exciting investors about the year ahead.
Technically, Gogo looks "bottomy" here. Shares have been forming a long-term double bottom pattern since November, and shares' double-digit price move is triggering the buy signal today. In other words, despite the size of the up-move in Gogo, there's still time to go long this stock here.
At the time of publication, author had no positions in the stocks mentioned