How to Trade Wednesday's Most Active Stocks -- Target, Lowe's, More

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 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.

Weatherford International

  • Nearest Resistance: $6
  • Nearest Support: $3.50
  • Catalyst: Offering

First on our list of the stock market's most actively traded issues is oilfield services stock Weatherford International (WFT) . Weatherford is up 1.75% on large volume, following the pricing of its 84.5 million share offering at $5.40.

Generally, dilutive offerings drive equity prices lower, but the strong pricing on the shares and the financial improvements from the proceeds are helping to bolster this stock today. Weatherford plans on using the cash for general corporate purposes, including debt payment.

In the long term, the technical trajectory in Weatherford doesn't look appealing. Shares have been in a well-defined downtrend for all of 2016, dragging lower over the course of the year. While the recent upswing in Weatherford looks auspicious, it's really just a counter-trend correction when taken in the context of the longer-term direction that shares are stuck in.

Caveat emptor.

Target

  • Nearest Resistance: $82
  • Nearest Support: $75
  • Catalyst: Q3 Earnings

Big-box retailer Target (TGT) is seeing big volume this afternoon, and is up more than 8% following the firm's third-quarter earnings call. Target generated a profit of $1.04 per share for the quarter, besting the 83-cent average estimate that Wall Street was expecting.

The firm pointed to stronger-than-anticipated back-to-school sales as the driver for the earnings beat. Likewise, Target raised guidance for the all-important holiday season, driving investors into buy-mode for shares.

In the long term, Target is breaking out of a double bottom pattern with today's big gap higher. That technical move clears the way for a retest of prior highs at $82 from this spring.

If you decide to buy the big upside move in Target here, it's a good idea to park a protective stop on the other side of the $75 breakout level.

Nokia

  • Nearest Resistance: $5.50
  • Nearest Support: $4
  • Catalyst: Analyst Upgrade

Network infrastructure stock Nokia (NOK) is essentially flat on large volume this afternoon. It is getting extra attention on the heels of an analyst upgrade.

Nordea raised its call on Nokia shares to buy from hold, but the boosted analyst outlook isn't translating into higher prices for the stock.

In the long term, Nokia's downtrend is alive and well right now, a fact that makes this stock pretty unappealing for buyers, even if shares do reverse higher here.

Apple

  • Nearest Resistance: $110
  • Nearest Support: $106
  • Catalyst: Technical Setup

Tech behemoth -- and Action Alerts PLUS holding -- Apple (AAPL) is seeing abnormally high volume this afternoon thanks to a technical setup that's coming together in the shares.

Apple spent last week correcting alongside the rest of the technology sector, but shares are catching a bid this afternoon, and are bouncing 1.8% higher to make a move toward prior resistance at $110.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

In the longer term, Apple's higher lows from May's lows are still intact, and that makes $110 an attractive buying opportunity as Apple's latest correction plays itself out.

Lowe's

  • Nearest Resistance: $70
  • Nearest Support: $64
  • Catalyst: Third-quarter earnings

Home improvement retailer Lowe's (LOW) is dropping this afternoon, off 2.7% as of this writing thanks to an earnings miss for the third quarter.

Lowe's reported profits of 88 cents per share, missing the 96-cent average guess from Wall Street. The firm also cut its full-year profit guidance from $4.06 to $3.52, adding to the selling pressure this afternoon.

Lowe's has been in a well-defined downtrend since August, when shares violated their uptrend and reversed course. While today's decline is being propelled by the earnings results, it's not significant from a technical standpoint -- Lowe's shares remain in their downtrending price channel here.

Advanced Micro Devices

  • Nearest Resistance: $7.50
  • Nearest Support: $6.50
  • Catalyst: Analyst Comments

Advanced Micro Devices (AMD) and its peers are popping higher today, following a note from Jefferies that points to the increased popularity of GPUs for new computing tasks as a driver of chip sales. AMD is up more than 6%, a move that's being brought about in part by this stock's overall buoyancy in 2016 and a key technical setup that's coming together.

AMD is currently forming a textbook example of an ascending triangle setup, a bullish continuation pattern that signals the potential for a second leg higher in this stock. For AMD, the big breakout level to watch is $7.50. If shares can clear that intermediate-term price ceiling, we've got our signal that buyers have retaken control of this stock.

AMD is within grabbing distance of that breakout level.

Microsoft

  • Nearest Resistance: $62
  • Nearest Support: $58
  • Catalyst: LinkedIn Concessions

Finally, Microsoft (MSFT) is drawing extra attention from traders, following news that the company has submitted concession offers to EU officials surrounding its acquisition of LinkedIn (LNKD) . Market participants are picking up shares in anticipation that the EU's ruling on the deal, scheduled for Dec. 6, will end a major regulatory problem for the buyout.

Technically speaking, Microsoft looks attractive here. Shares have been in an uptrend since the end of the summer, and they're bouncing off of trendline support for the third time this week. If you decide to buy Microsoft here, it makes sense to park a protective stop just below the 50-day moving average.

This article is commentary by an independent contributor. At the time of publication, the author was long AAPL.

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