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.
- Nearest Resistance: $68
- Nearest Support: $67
- Catalyst: Q1 Earnings
Leading things off this afternoon is retail giant Target (TGT) . Target is selling off hard this afternoon -- nearly 9% as of this writing, following the firm's first-quarter earnings call. Target reported earnings of $1.29 per share, a result that came in slightly better than analysts' average best guess of $1.19. Even so, concerns over a "volatile" retail environment during the earnings call is hampering guidance and adding Target to the list of retailers predicting soft demand in the quarter ahead.
From a technical standpoint, Target has been looking weak for a while now, ever since shares violated support at $79 back at the beginning of this month. Now shares are back in their downtrend from 2015 and testing a long-term support level at $67. If shares close below $67 this week, Target opens up a lot more downside risk from here.
Target is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio. "Every quarter, there's at least one company earnings release that leaves us with egg on our face," Cramer and Research Director Jack Mohr wrote Wednesday morning. "This quarter, Target is the culprit, reporting disappointing results this morning and issuing even more disappointing second-quarter guidance."
- Nearest Resistance: $14
- Nearest Support: $13.84
- Catalyst: Acquisition
Shares of small-cap cloud-based contact center company inContact (SAAS) are rallying nearly 55% this afternoon, boosted by news that the company is being acquired by Nice Systems (NICE) in a deal worth $14 per share. The transaction is expected to close before the end of the year.
Shares of inContact rallied within a few cents of their acquisition price at the open this morning, which means that the money's already been made on the inContact trade. Late-to-the-game traders should look elsewhere for upside opportunities.
- Nearest Resistance: $11
- Nearest Support: N/A
- Catalyst: Q1 Earnings
Chinese discount retailer Vipshop Holdings (VIPS) is selling off nearly 13% on big volume this afternoon, down big following the firm's first-quarter earnings call. Excluding one-time items, Vipshop earned $1.04 for the quarter, beating expectations. But guidance was weaker than expected for the second quarter, driving today's selloff in this Chinese retail stock.
Technically speaking, Vipshop's chart is showing some big long-term cracks. Shares have been forming a long-term descending triangle in recent months, a bearish price pattern that signals a sell on a violation of support at $11. That $11 line in the sand is getting violated this afternoon. While the breakdown isn't quite confirmed at this point, it's close. If Vipshop fails to recapture $11 in the next trading session, then a whole lot of downside risk just opened up in this stock.
- Nearest Resistance: $66
- Nearest Support: $62
- Catalyst: Sympathy Mover
Walmart (WMT) is seeing big volume thanks to the big selloff in Target this afternoon. This big-box retail peer is down more than 2.5% as I write this afternoon, dropping ahead of tomorrow's scheduled earnings call on fears that Walmart will follow the lead of other retail stocks in forecasting weak second-quarter sales.
Already, the price action in Wal-Mart has rolled over, signaling that this stock's recent run of outperformance could be coming to a close. The violation of the uptrend earlier this month was the first sign of that shift. While the numbers Walmart reports tomorrow are anyone's guess at this point, buyers are seriously lacking in this stock in May.