How to Trade the Week's Most Active Stocks - Ford, J.C. Penney, Nvidia

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.

So, today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market...

iShares MSCI Emerging Markets ETF

  • Nearest Resistance: $36
  • Nearest Support: $33
  • Catalyst: Technical Setup

Leading off our list of the week's most actively-traded issues is the iShares MSCI Emerging Markets ETF (EEM) . This $27 billion exchange-traded fund has been a powerhouse in 2016, rallying more than 20% from its lows back in January through today - but that doesn't mean you should buy it now. This week, EEM violated the uptrend that's been in place for most of the year, opening up significant downside risk at this point. $33 looks like the next meaningful support level on the way down from here, but investors should avoid buying EEM until this big emerging markets ETF can start establishing some higher highs and lows again.

VanEck Vectors Gold Miners ETF

  • Nearest Resistance: $25
  • Nearest Support: $20
  • Catalyst: Spot Gold

The VanEck Vectors Gold Miners ETF (GDX) was another exchange-traded fund that topped the NYSE's most actively-traded names. GDX has been getting plenty of attention in the last few months, rolling over in August after an extremely well-defined uptrend that kicked off in January. While many investors had been hoping that gold would rally hard on Donald Trump's election win, that's clearly not happening here - the intermediate trend in GDX hasn't changed. In fact, shares are selling off to the bottom of their downtrend channel in November. Put simply, it still makes sense to avoid GDX for the time being.

Ford Motor Co.

  • Nearest Resistance: $13.75
  • Nearest Support: $12
  • Catalyst: Trade Barrier Speculation

Meanwhile, one stock that is seeing a palpable benefit from Donald Trump's win is Ford Motor  (F) . Ford and its U.S.-based peers ended the week higher on speculation that Trump-backed trade barriers could create a problem for foreign carmakers hoping to sell into the U.S., the world's largest automobile market. While the potential trade barriers could cut both ways, the size of the American car market means that any extra costs to import vehicles into the U.S. could actually be a net positive for American automotive companies.

The possibility of an advantage for U.S. automaker is proving to be exciting enough for Ford shareholders that it's breaking this company free of the bearish price pattern that's been in play since the end of the summer. Shares broke through the top of a resistance line on Friday, signaling the potential for higher ground ahead. From here, the next relevant price ceiling for Ford comes into play up at $13.75.

J.C. Penney Co.

  • Nearest Resistance: $11
  • Nearest Support: $8
  • Catalyst: Q3 Earnings

Department store chain J. C. Penney  (JCP) ended the week on a strong note, climbing 3.6% during Friday's session following third quarter earnings results. Penney lost 21 cents per share for the quarter, a result that was essentially right on target with analysts' average expectations. Penney also cut its full year comparable sales forecast during its earnings call, making it one of the few companies to pull that feat off without seeing a drop in its share price in reaction. The firm had expected 3%-4% comp sales increases; now it's looking at 1%-2% growth.

From a technical standpoint, J. C. Penney's bounce is well-timed. The stock has been in a well-defined uptrend since January, bouncing higher on every test of trendline support so far - we're seeing the latest bounce higher for Penney this week. If you decide to buy the bounce in J.C. Penney, it makes sense to park a stop on the other side of $8 support.

NVIDIA Corp.

  • Nearest Resistance: $90
  • Nearest Support: $70
  • Catalyst: Q3 Earnings

Third quarter earnings fueled a nearly 30% rally in shares of semiconductor stock Nvidia  (NVDA) to end the week Friday, making it one of the biggest winners in the tech sector for November. NVIDIA earned adjusted profits of 94 cents per share for the third quarter, besting the 69-cent profit that analysts were expecting on average. Likewise, the company boosted its fourth quarter sales forecast, potentially putting an end to conditions that haven't been favorable for chipmakers in the last year and change. Friday's rally in NVIDIA marks the biggest single-day surge for shares since 2009.

From a technical standpoint, the upside move in Nvidia is the latest in a series of smaller upside moves this year. Since February, NVIDIA has been tacking higher in a well-defined uptrend that's still in play this fall, even though NVDA is hovering at the top of its trading range. That means, despite the 170% upside move in NVDA year-to-date, this is still a "buy the dips stock".

General Motors

  • Nearest Resistance: $37
  • Nearest Support: $33.50
  • Catalyst: Trade Barrier Speculation

General Motors (GM) is another U.S.-based automaker that ended the week on a strong note thanks to speculation that Donald Trump's administration could impose challenges for foreign car companies looking to sell into the world's biggest market for automobiles. GM has been exhibiting relatively strong price action for much of 2016, most recently with an uptrend that kicked off at the end of the summer. Friday's 4% pop in GM is breaking shares above the top of that uptrend, potentially clearing the way for a retest of 52-week highs just below the $37 level. Keep an eye on GM now that it's back at multi-month highs.

Microsoft Corp.

  • Nearest Resistance: $61
  • Nearest Support: $58
  • Catalyst: Technical Setup

Microsoft  (MSFT) ended the week relatively flat on large volume, gaining 0.55% on Friday. But while the price move wasn't big, the significance was. Microsoft finished the week trading at a key trendline support level, a price line that gives traders a buying opportunity on the next leg higher. If Microsoft can bounce higher at the start of the week ahead, consider it a buying opportunity for this mega-cap tech stock.

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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