How to Trade Cognizant, BofA, Cisco and Monday's Other Most Active Stocks

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.

Bank of America

  • Nearest Resistance: N/A
  • Nearest Support: $17.75
  • Catalyst: Technical Setup

First on our list of high-volume setups this morning is $210 billion banking behemoth Bank of America (BAC) . BofA is consistently one of the most heavily-traded stocks on the New York Stock Exchange, and today's proving to be no exception as this big stock starts the week off in correction mode.

Bank of America has spent most of November in a breakneck rally, up almost 25% since the start of the month. That makes today's 1.2% retracement look a lot less concerning here, particularly given the fact that BofA made new 52-week highs during Friday's shortened trading session. BofA is still in "breakout mode" this week.

Cognizant Technology Solutions 

  • Nearest Resistance: $59
  • Nearest Support: $56
  • Catalyst: Activist Letter

$36 billion IT services stock Cognizant Technology Solutions  (CTSH) is up more than 8% on big volume this afternoon, popping higher following news that Paul Singer's Elliott Management had sent the firm a letter proposing a three-part plan that Elliott believes could send Cognizant to $80 to $90 a share by the end of 2017. Elliott's funds own approximately 4% of Cognizant, according to the letter.

Technically speaking, today's move higher is significant. Shares of Cognizant have been trading lower over the long-term, selling off in a well-defined downtrend that's harangued shares of all of 2016. Today's gap up is breaking Cognizant above that downtrend. Look for some upside continuation in the trading sessions ahead.

United States Oil Fund

  • Nearest Resistance: $11.50
  • Nearest Support: $9.75
  • Catalyst: Spot Oil Prices

Oil is still in an uptrend -- at least that's the message being sent be the United States Oil Fund's (USO) stock chart right now. This big ETF is investors' most accessible way to get exposure to spot oil prices, and it's up a little over 1.5% as of this writing. Long term, USO has been trending higher since January, catching a bid at every test of trendline support on the way up. After a fifth touch of that trend line earlier this month, oil prices are making a rebound towards prior highs at $11.50. Now looks like a decent opportunity to build a position in USO.

Micron Technology

  • Nearest Resistance: N/A
  • Nearest Support: $18
  • Catalyst: Analyst Upgrade

It's been a great year for shares of Micron Technology (MU) so far -- shares of this $21 billion tech stock are up more than 42% since the start of 2016. Micron is showing off some continuation today, up slightly on news that a Deutsche Bank had boosted its price target on Micron from $20 to $24. Micron is holding out near its 52-week highs this afternoon.

From a technical standpoint, Micron Technology looks strong here. Shares have been holding onto a well-defined uptrend since mid-May, bouncing higher on every test of the bottom of the trend channel. While shares could see some semblance of a correction after this stock's most recent leg up, Micron is still a "buy the dips stock" this fall.

Southwestern Energy

  • Nearest Resistance: $15
  • Nearest Support: $9
  • Catalyst: Analyst Upgrade

Oil and gas producer Southwestern Energy (SWN) is up 3% this afternoon on big volume, boosted by the combination of higher energy prices overnight and an analyst upgrade. BMO upgraded Southwestern from market perform to outperform, boosting the firm's price target to $18. That represents a 52% upside potential from where shares sit now.

Southwestern's technical picture looks attractive in the long-term. Shares have been making a series of higher lows this year, putting SWN on track for a test of prior highs up at $15. From there, a breakout above $15 signals a fresh buy signal in SWN - that's good reason to keep a close eye on shares here, and how they interact with that long-term price ceiling in the weeks ahead...

Cisco Systems

  • Nearest Resistance: $34
  • Nearest Support: $29.50
  • Catalyst: Technical Setup

Cisco Systems (CSCO) is testing trendline support this afternoon, the fifth such test of that uptrend support line since the Cisco rally kicked off back in mid-February. So far, every test of this key trendline support level has been followed up by a rally toward the top of Cisco's price channel.

That means that the next bounce higher in CSCO is a low-risk, high-reward buying opportunity. If you decide to by Cisco here, the 200-day moving average becomes a logical place for a protective stop.

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

Yamana Gold

  • Nearest Resistance: $3.50
  • Nearest Support: $2.60
  • Catalyst: Spot Gold Prices

Last on our list of today's biggest-volume trades is gold miner Yamana Gold (AUY) . Like its major peers, this big gold producer basically acts like a leveraged bet on gold prices, a fact that's driving a 2.6% big-volume bounce this afternoon.

Despite the notable upside we're seeing in shares of Yamana today, the bigger picture looks considerably less auspicious. Yamana violated its 2016 uptrend back in July, rolling over to kick off a well-defined downtrend that's been in force ever since. While Yamana is down at the bottom of that downtrend range here, it's a mistake to buy shares as long as the price action remains pointed lower.

At the time of publication, author had no positions in the stocks mentioned.

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