4 Huge 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 Under $10 Set to Soar

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 Big Stock Trades to Buy in June

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.

Whole Foods Market

Nearest Resistance: $47.50
Nearest Support: $40
Catalyst: Technical Setup

After crashing at the beginning of May, shares of Whole Foods Market (WFM) are starting to show signs of a rebound. And today, shares are following up a breakout on high trading volume. For the last month, WFM has been forming a rounding bottom, a reversal setup that indicates a gradual change in control from sellers to buyers; yesterday's move through $40 was the trigger that means buyers are finally in control.

From here, WFM looks likely to fill the gap it made when it fell hard on earnings and guidance numbers a month ago. The next resistance level at $47.50 leaves a lot of potential upside in shares as I write.


Nearest Resistance: $5
Nearest Support: $4
Catalyst: Stock Offering

Small-cap biopharmaceutical stock Novavax (NVAX) is seeing a big-volume drop this afternoon, down more than 7.5% after pricing a 25 million share public offering of stock at $4. The fundraising effort should net NVAX approximately $94 million in cash for the development of its drug candidates, but shares are dropping on the equity dilution. Despite the drop today, Novavax has a decent-looking technical picture right now.

NVAX bottomed in the middle of April, and it's been putting in higher lows ever since. Importantly, today's drop isn't threatening the uptrend that's been in place since then. It looks like the change-in-trend is holding at NVAX. Buyers should wait for a bounce off of support before piling in.

Banco Santander Brasil

Nearest Resistance: N/A
Nearest Support: $6.90
Catalyst: Brazilian Equity Strength

Banco Santander Brasil (BSBR) is getting pushed higher on big volume thanks to a pop in Brazil's equity indexes today. The country's Ibovespa index is up more than 2.6% this afternoon following a political poll that chowed dropping support for the country's president, Dilma Rousseff. Investors are speculating that a more laissez-faire leader in Brazil could reduce the government's meddling with state-owned firms.

BSBR's move today is notable because shares are breaking out to new highs this afternoon on the Ibovespa strength. New 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.


Nearest Resistance: N/A
Nearest Support: $40.50
Catalyst: Technical Setup

Last up is tech giant Microsoft (MSFT) a name that was flashing a technical buy signal earlier in the week. Today, shares are moving another leg higher on big volume. MSFT is a clear-cut breakout trade, as buyers absorb any selling pressure that's been hanging out in the low $40s. With MSFT hitting new highs this week, it makes sense to go long for the exact same reasons as in BSBR.

The 50-day moving average has been a decent proxy for support in MSFT on the way up. It's a logical spot for risk-averse traders to keep a protective stop.

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 the names 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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