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.
Market Vectors Gold Miners ETF
- Nearest Resistance: $17
- Nearest Support: $12.50
- Catalyst: Spot Gold Volatility
Up first is the Market Vectors Gold Miners ETF (GDX - Get Report) , a $5 billion exchange-traded fund that's been a consistently huge-volume issue in recent weeks. This gold miner fund has been in rally mode in recent sessions, rocketing on a volatile rebound in spot gold prices. Long-term shares of GDX have looked "bottomy" for a while now, signaling the possibility of a meaningful reversal from the long-term selloff in this popular fund.
And while shares tested a breakout through $17 resistance this week, it didn't hold, and shares are back to consolidating just below that $17 price ceiling. A confirmed breakout above $17 is the buy signal to keep on your radar in February.
- Nearest Resistance: $92.50
- Nearest Support: N/A
- Catalyst: Q1 Earnings
Walt Disney (DIS - Get Report) is correcting this afternoon, down 4.5% on big volume following the firm's first quarter earnings release. Disney earned profits of $1.63 per share for the quarter, besting the $1.45 best guess that analysts were hoping for. Despite the earnings beat, slumping profits at ESPN, historically one of Disney's biggest cash cows, are scaring investors off from this entertainment giant.
Technically speaking, today's drop is an important intermediate-term breakdown. Shares are violating a former price floor at $92.50, clearing the way for lower ground ahead. If you're looking for a good opportunity to buy the dips in Disney, this isn't it. Wait for shares to establish some semblance of support before trying to buy.
Energy Transfer Equity
- Nearest Resistance: $7.50
- Nearest Support: $5
- Catalyst: Relief Rally
Energy Transfer Equity (ETE) is seeing a 17% relief rally on big volume today, rebounding big following an even bigger selloff. In the last year, this stock has given back nearly two-thirds of its market value, with recent selling coming in over concerns that the firm's pending $21 billion acquisition of Williams (WMB - Get Report) isn't going to happen. Shares are currently pricing in a 21% risk premium on the deal -- one of the largest risk premiums for a deal of its size.
Energy Transfer Equity has been in a parabolic downtrend for the better part of the last year -- and while today's big bounce is undoubtedly a good thing for longs, it's too small on a relative basis to look at as anything other than a relief rally. Caveat emptor.
- Nearest Resistance: $57
- Nearest Support: $49
- Catalyst: Technical Setup
Microsoft has looked corrective in 2016, violating its uptrend from August's lows and retracting its way down to the lowest levels seen in months. But $49 has been acting like an important support level in the last couple of months -- and it's driving the bounce in Microsoft today.
For Microsoft bulls, now looks like a reasonably good time to think about adding to a position -- but it makes sense to keep a protective stop nearby at the 200-day moving average.
For another technical take on Microsoft, check out "Microsoft Is Looking Good: Must-See Charts."