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 tech stocks on the market.
- Nearest Resistance: $32
- Nearest Support: $27.50
- Catalyst: Q3 Earnings
Twitter (TWTR) - Get Report is correcting hard this afternoon after publishing its third-quarter financials. Twitter reported profits of 10 cents per share, besting the average best guess of 4.8-cent profits from analysts. But Twitter's outlook on monthly average users, a key performance metric for social media stocks, remained unchanged for the quarter ahead, stoking fears that growth is slowing at the troubled microblogging service. Twitter also said it expects fourth-quarter revenue of $695 million to $710 million, below analysts' estimates of $739.69 million.
"The intraquarter results are far less important than the outlook; in order for investors to have conviction, the company must demonstrate a path toward growth, user engagement and concrete improvements within the core model. At this point, Twitter's oft-cited 'potential,' 'opportunity' and 'differentiation' feel more like a pipe dream than anything else."
From a technical perspective, for now, Twitter is managing to hold onto its breakout from the beginning of this month, now testing support at the 50-day moving average. As long as shares can catch a bid here, it looks like a reasonable buying opportunity to bet on a rebound in Twitter.
On the flipside, if shares violate the 50-day and re-enter their prior downtrend from earlier this year, then look out below. That makes that level a logical place to park a protective stop if you decide to buy Twitter here.
For another technical take on Twitter, check out "Twitter Investors Should Prepare for Pain and Frustration."
- Nearest Resistance: $117.50
- Nearest Support: $111
- Catalyst: Q4 Earnings
Tech giant Apple (AAPL) - Get Report is up nearly 2% this afternoon, boosted by record profits for the firm's fiscal fourth quarter. Apple earned profits of $1.96 per share, besting the average analyst estimate of $1.87 for the world's most closely watched company. Likewise, Apple expects another record holiday quarter ahead, signaling to Wall Street that the firm's most lucrative earnings period should outperform expectations.
From a technical standpoint, Apple continues to flirt with resistance up at $117.50. We need to see that upside barrier get taken out by increasingly eager buyers before it makes sense to call Apple a high-probability buy for October. Keep a close eye on shares; they're close to that $117.50 level this afternoon.
For another technical take on Apple, check out "How to Trade Apple Based on Positive Earnings, Technical Analysis."
As for TheStreet's Cramer, he said he loved what he heard on Apple's conference call. Among other things, his takeaways from the call included that Apple has a "huge amount of cash and no end to it" as well as "no real competition on high-end phones right now."
"Who says it can't go higher?" Cramer said. "Own it; don't trade it."
- Nearest Resistance: $64
- Nearest Support: $60
- Catalyst: Q3 Earnings
Shares of cloud services firm Akamai Technologies (AKAM) - Get Report are getting shellacked on huge volume this afternoon, as shares tumble more than 19% following third-quarter earnings. Earnings themselves were strong for the quarter: Akamai beat analyst expectations, generating 62 cents in comparable profits for the third quarter. Wall Street was only looking for 57.5 cents per share. But Akamai's outlook was weak for the fourth quarter, and shares are getting punished this afternoon as a result of that.
Technically speaking, Akamai's price action has been showing a few cracks in hindsight, forming a broadening pattern as volatility crept into shares. Today's big breakdown signals that possibility of more downside to come in Akamai. Buyers should wait for shares to establish some semblance of support again before jumping into this stock.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long Apple.