4 Big 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.

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.

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

Bank of America

Nearest Resistance: $18
Nearest Support: $16
Catalyst: Loan Settlement

Bank of America (BAC) rallied hard to end the session yesterday, buoyed by news that the firm had penned a $16.7 billion settlement to end federal and state prosecution related to the financial crisis. While the fine is the biggest yet to stem from the financial crisis, investors rejoiced over the removal of a serious black cloud over BofA's operations. Shares rallied 4.12% during trading on Thursday.

From a technical standpoint, Bank of America's price action looks solid heading into the second half of the year. Shares cleared a key resistance level at $16 with yesterday's breakout, and that clears the way to a retest of the $18 high water mark set back in March. If you decide to be a buyer here, I'd recommend keeping a protective stop at $15.

eBay

Nearest Resistance: $59
Nearest Support: $49
Catalyst: PayPal Spinoff Rumors

PayPal spinoff rumors are sending investors flocking to shares of eBay (EBAY) once again this week. Despite the firm's claims that nothing has changed, a report from The Information published yesterday that eBay has been telling candidates for PayPal's chief executive role that the firm could spin off the payment unit as early as next year.

Despite the 4.6% pop in eBay shares yesterday, it's a little early to pile into this stock. Shares are currently stuck in a wide range between $49 and $59, the same exact spot they've been in for more than a year. A breakout above $59 is a signal that buyers have finally asserted control. Until then, don't expect much.

Sears Holdings

Nearest Resistance: $37.50
Nearest Support: $27.50
Catalyst: Q2 Earnings

Sears Holdings (SHLD) is adding onto a streak this week -- the problem is that it's not a good one. SHLD reported second-quarter numbers to Wall Street yesterday, logging the firm's 30th straight quarter of sales declines. Losses increased to $5.39 per share for the quarter, and shares sold off to the tune of 7% as a result.

As bad as things look on Sears' income statement, the chart could still frankly look a lot worse. That's because shares fell within their existing range, keeping this stock a lot closer to resistance at $37.50 than to support down at $27.50. That doesn't mean that SHLD looks buyable here, but bargain-hunters could have a low-risk entry opportunity closer to that $27.50 support line.

Hormel Foods

Nearest Resistance: N/A
Nearest Support: $49
Catalyst: Q3 Earnings

$12 billion food producer Hormel Foods (HRL) rallied 4.3% yesterday following the firm's third-quarter earnings release. Hormel reported earnings of 51 cents per share, besting analysts' 48-cent best guess, and forecasting full year earnings to fall between $2.17 and $2.27.

Hormel is another name that's been in a very predictable uptrend for the last year. While today's pop broke shares out above $49, it's a little early to call it an acceleration in the trend. Either way, now looks like a good time to be long Hormel.

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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