BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. Its 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. Its a concept thats 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, well leverage the power of the crowd to take a look at some of the most active stocks on the market today.
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. Thats especially true now that earnings season is officially underway. And when theres a big catalyst, theres often a trading opportunity.
Without further ado, heres a look at today's stocks.
Nearest Resistance: $36
Nearest Support: $24
Catalyst: Holiday Sales Miss
Best Buy (BBY) is getting shellacked this afternoon after the firm reported a bigger-than-expected drop in holiday sales in spite of aggressive discounting. As Best Buy's wares become increasingly commoditized, the firm is facing challenges competing against cost leaders such as Amazon.com (AMZN). The 28% decline in shares today indicates that today's sales reports is giving investors serious pause about the sustainability of BBY's model. The weak sales themselves don't justify lopping almost a third off of Best Buy's valuation.
Best Buy spent most of the last year in rally mode, bouncing its way higher off of the 50-day moving average until this past quarter, when shares fell through that long-time support level and triggered a head and shoulders top pattern.
Today's huge gap brings shares well below the price objective of the head and shoulders, but that doesn't mean it's buyable here; we're still well above $24 support.
Nearest Resistance: $10
Nearest Support: $6.50
Catalyst: Store Closures
Shares of J.C. Penney (JCP) are getting shoved 5.3% lower this afternoon after news hit that the firm would be closing 33 stores and cutting 2,000 jobs as the latest step in its restructuring efforts. Mr. Market isn't convinced that the efforts will accomplish much -- and shares of JCP reflect that.
JCP has been getting hammered in the last year, tumbling 63.7% in the trailing 12 months. Not surprisingly, the technicals aren't looking particularly good right now; Penney remains in a very well-defined downtrend. While the swing low in October could be the start of a bottoming pattern, a buy signal wouldn't come until $10 gets taken out, and that's a long way away. I'd recommend staying away from this retailer for the foreseeable future.
Nearest Resistance: $4.80
Nearest Support: $4.57
Catalyst: Retail Sympathy Mover
Office supply retailer Office Depot (ODP) is seeing high volume today on the heels of Best Buy's negative retail results -- in fact, the rest of the retail space is as well. But even though Office Depot isn't the biggest mover (at around a 3% drop), its volume is the most notable. That's because today's sympathy move broke shares down below an important support level at $4.80. Now that price level is resistance.
ODP's chart looks bearish right now. While shares had been consolidating sideways, ODP resolved to the downside at the start of the year, and today's $4.80 violation is just the latest in a string of negative factors. Relative strength has been abysmal in ODP since all the way back in November. This is another name to avoid for the time being.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.