3 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.

>>5 Stocks Set to Soar on Bullish Earnings

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 today.

>>5 Ways to Profit From a Crowded Short Trade

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. And when there's a big catalyst, there's often a trading opportunity.

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


Nearest Resistance: $13.18
Nearest Support: $12.50
Catalyst: Q1 Earnings

Shares of aluminum giant Alcoa (AA) are up more than 4% in this afternoon's session, buoyed by a solid first-quarter earnings call. Alcoa earned 9 cents per share for the quarter, beating analysts consensus estimate of 5 cents. Better, the firm announced that it forecasts demand for the rest of the year to remain strong, laying the groundwork for even more earnings growth in the quarters ahead.

There's no denying the fact that Alcoa's chart looks solid right now. Shares have been bouncing higher in a textbook uptrend for more than six months now, catching a bid every time shares have slipped to test trend line support. Today, AA is attempting to move through resistance just above $13. If shares can catch a bid at that level, AA becomes buyable.

American Apparel

Nearest Resistance: $0.60
Nearest Support: $0.50
Catalyst: Share Purchase

Small-cap clothing stock American Apparel (APP) is getting a 6% boost this afternoon, up on news that the firm got a cash infusion from Swiss investment firm FiveT Capital AG. FiveT snatched up approximately half of the firm's most recent share offering, sparing it from a solvency crunch with a looming debt payment. The buy also makes FiveT the biggest outside investor in American Apparel.

From a technical standpoint, today's pop is a reprieve from big selling pressure, as shares cracked nearby resistance at $0.50. But while this stock is no longer a falling knife, it's still not a particularly bullish name. Nimble traders can play the gap fill to $0.60, but most investors should still stay away.


Nearest Resistance: $62.50
Nearest Support: $55
Catalyst: Various

Finally, Facebook (FB) is up almost 5% this afternoon, for a handful of reasons. Between COO Sheryl Sandberg saying she's sticking around the social network to big user growth in India, there are lots of news items to attribute the move to this afternoon, but the most important story comes from this stock's chart.

Despite a bounce in shares of FB, the trend is still lower in this stock. While the recent downtrend is narrow, it's proven formidable for buyers since the beginning of March. I'd recommend staying away from the long side of this stock until it can push through $62.50 resistance.

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

-- Written by Jonas Elmerraji in Baltimore.





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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. Follow Jonas on Twitter @JonasElmerraji

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