How to Trade 3 of the Market's Most Active Stocks

 

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.

National Bank of Greece


Nearest Resistance: $1.4
Nearest Support: $1
Catalyst: Greek Talk Collapse

One of the biggest casualties this afternoon is National Bank of Greece  (NBG), down more than 6% on big volume this afternoon following news that talks had collapsed between Greece and its creditors. Greece is due to repay 1.6 billion euros to the IMF by the end of the month, which means that the country is likely to default on its obligation unless a final-hour agreement is reached before then.

Technically speaking, National Bank of Greece has looked "toxic" for a while now, and shares' decline this afternoon shouldn't be much of a surprise. $1 is the line in the sand to watch closely in this high-profile banking stock. If support at $1 gets violated, then look out below in National Bank of Greece.




DiamondRock Hospitality

Nearest Resistance: $13.75
Nearest Support: $12.75
Catalyst: Technical Setup, Block Trades

$2.7 billion hotelier DiamondRock Hospitality (DRH) is seeing a 2.5% move higher on huge volume this afternoon, a move driven by a technical setup and big block trades. DiamondRock saw eight 1 million-share block trades hit the tape just before the opening bell this morning, kicking off an extremely active trading session for this big stock. For comparison, DiamondRock's typical daily volume is only about 1.5 million shares.

From a technical standpoint, shares of DiamondRock are bouncing off of support at $12.75, a near-term floor that shares hit early last week. That said, the longer-term trend is still clearly down right now. Until shares can catch a bid above the top of that downtrend, it's a good idea to avoid the long-side.


Micron Technology


Nearest Resistance: $28
Nearest Support: N/A
Catalyst: Analyst Downgrade

$26 billion flash memory maker Micron Technology  (MU) is down more than 4% this afternoon, swatted lower by an analyst downgrade from Morgan Stanley. Morgan Stanley analyst Joseph Moore cut Micron to underweight, slashing the firm's price target for the tech stock to $21.

Micron is hitting new 52-week lows on the news, but the chart has looked ugly for a while now, bouncing lower in a textbook downtrend for the last seven months now. Micron is best avoided by longs until shares can break to the topside of that downtrending channel.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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