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.
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.
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: N/A
Nearest Support: $82.50
Catalyst: Q1 Earnings
Shares of computer storage stock SanDisk (SNDK) are up more than 10% this afternoon, following big earnings surprise for the first quarter. SNDK brought in $1.44 per share in the last three months, beating analysts' $1.25 target. More significant, from here, shares are still bouncing higher in a well-formed uptrending channel, making SNDK a textbook "buy the dips" opportunity. The optimal time to build a position comes on this stock's next successful test of trend line support.
The earnings beat is pressing SNDK against new highs this afternoon, an important bullish signal from Mr. Market. Those highs are significant from an investor psychology standpoint because they mean 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.
If you decide to be a buyer here, it makes sense to keep a tight protective stop in place.
Chipotle Mexican Grill
Nearest Resistance: $560
Nearest Support: $530
Catalyst: Q1 Earnings
Chipotle Mexican Grill (CMG) gapped up this morning on first-quarter earnings, only to spend the rest of the day fading lower. CMG earned profits of $2.64 for the first quarter, a number that fell short of the consensus EPS target of $2.86 that analysts were looking for. No one seemed to notice until this afternoon, when shares began fading hard into the second half of the session -- maybe traders noticed short lines at Chipotle during the lunch rush.
Jokes aside, the price action this afternoon in CMG isn't the end of the world; shares are holding an important support level at $530 as I write. But the lack of buying pressure at higher levels doesn't look promising for CMG in the near-term. Buyers should wait for shares to conquer resistance at $560 before jumping in. There's a lot of new selling pressure there that we'll want to see get taken out before shares regain upward mobility.
International Business Machines
Nearest Resistance: $195
Nearest Support: $187.50
Catalyst: Q1 Earnings
Last, but far from least, is International Business Machines (IBM), a big tech name that's moving lower after posting earnings yesterday. IBM earned $2.54 per share for the first quarter, a number that was more or less in-line with Wall Street's expectations. But top-line failed to show growth, and that's why shares are getting unloaded today.
From a technical standpoint, IBM is pumping the brakes at $187.50 support, after falling down through the short-lived uptrend that started in February. Looking longer-term, however, shares are holding onto support at $187.50, the breakout level that finally got taken out in March after a multi-month base. The news cycle may be negative, but IBM looks buyable here with a stop loss at the 200-day moving average.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.