4 Hot Stocks to Trade (or Not)

7 Hot Stocks to Trade (or Not)

BALTIMORE ( Stockpickr) -- 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.

>>5 Stocks Setting Up to Break Out

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 today.

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These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.

Without further ado, here's a look at today's stocks.

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Chesapeake Energy

Nearest Resistance: $21.50
Nearest Support: $19.50
Catalyst: CEO Retirement

On the other side of the spectrum, Chesapeake Energy ( CHK) is rallying hard following news that embattled CEO and co-founder Aubrey McClendon would be stepping down from his post on April 1. No, it's not just an early April Fool's joke. McClendon, you'll remember, was at the center of a debacle where he'd borrowed around a billion dollars against his holdings in CHK to fund personal stakes in wells used by Chesapeake. Since that came out, the tenuous relationship between McClendon and the board has been grabbing more headlines than Chesapeake's own business has.

Shares popped on the news, rallying up to 11% in the pre-market, but they've been fading over the course of the trading session, only up around 5% as I write. With shares near an important resistance level at $21.50, but well above the equally strong support levels in the mid-teens, I think it's premature to jump into this name just yet. Instead, a bounce at a weaker $19.50 support level would be a more cautious entry opportunity for investors.

Bank of America

Nearest Resistance: $12.25
Nearest Support: $11
Catalyst: Technical Setup

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Bank of America ( BAC) is a perennial name on our list of the most active stocks -- but today it's getting a higher showing thanks to the technical setup that's shaping up in shares. BofA has been forming a descending triangle pattern for the past few weeks. What remains to be seen now is whether the ostensibly bearish setup will trigger, pushing shares lower, or if BofA's setup will just end up being a consolidation. A breakdown below support at $11 is the sell signal for this stock.

Relative strength has been stellar for the financial sector over the past several months, and as a whole, most stocks in the sector are still looking strong. That adds some extra evidence that it's not time to panic on Bank of America just yet.


Nearest Resistance: $14.25
Nearest Support: $11.50
Catalyst: Earnings Call

Things are looking less bullish over at Ford ( F). The automaker reported its own fourth quarter numbers yesterday morning, and shares are continuing to sell off today. It doesn't take an expert market technician to see what's going on in shares of Ford. One glance at this stock's chart, and the rounding top in shares looks pretty clear.

As I write, Ford's shares are sitting right below that top, not an auspicious position to be in. That's magnified by the fact that Ford is also so far above its nearest significant support level at $11.50. That means that this stock could have a lot further to fall before buyers start stepping back in. I'd recommend waiting for support to get established before attempting to jump in. If you're looking for an exit strategy in Ford, now's the time to get out.

Boston Scientific

Nearest Resistance: N/A
Nearest Support: $6.80
Catalyst: Earnings Call

Last but certainly not least is Boston Scientific ( BSX), the $10 billion medical device maker. BSX announced earnings yesterday, reporting numbers that sent investors into buy mode. Today, BSX is seeing continuation, with shares bid up around 3% as I write.

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That's got BSX testing new 52-week highs in this week's trading, a good sign for shareholders. Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses. For late-to-the-game buyers though, I'd recommend sitting on the sidelines until BSX pushes above yesterday's high water mark.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to
TheStreet . Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily , and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

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