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 and market data 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.
- Nearest Resistance: $71
- Nearest Support: N/A
- Catalyst: Q4 Earnings
$88 billion biopharma stock Gilead Sciences (GILD - Get Report) is leading off our list of the market's most heavily traded stocks today, down 9.6% on big volume after reporting its first-quarter earnings numbers after the closing bell Tuesday.
Gilead earned an adjusted profit of $2.70 per share for the quarter, besting the average estimate of $2.51 from Wall Street. Despite the earnings beat, concerns over the deterioration of Gilead's hepatitis C franchise are what's driving today's selloff.
From a technical standpoint, today's selling isn't a total surprise. Shares had been forming a textbook bearish price setup since this past fall, triggering additional downside risk with a violation of support at $71. That breakdown is contributing to the size of today's downside move in Gilead. Near-term, this is a stock you should avoid owning.
- Nearest Resistance: $35
- Nearest Support: $29
- Catalyst: Offering
Mid-cap oil and gas stock Parsley Energy (PE - Get Report) is raking near the top of the NYSE's most actively traded list Wednesday, down 7.2% following a deal announcement that has the firm buying assets from Double Eagle Energy with proceeds from a 36 million-share offering. The offering is expected to close on or around Feb. 13, with gross proceeds of $1.116 billion. Analysts are reacting to the deal as mixed for Parsley Energy.
Technically, the picture looks much clearer. Shares violated their long-term uptrend at the end of January, and we're seeing a continuation in that trendline break with today's outsized selling. It makes sense to steer clear of the long side of Parsley Energy until this stock can start establishing some higher lows again.
Direxion Daily Junior Gold Miners 3x Bull ETF
- Nearest Resistance: $15
- Nearest Support: $10
- Catalyst: Spot Gold
Meanwhile, things are looking definitively bullish in the Direxion Daily Junior Gold Miners 3x Bull ETF (JNUG - Get Report) . JNUG is a popular exchange traded fund that tracks a triple-leveraged basked of gold stocks. After bottoming in December, this ETF is pushing into rally mode thanks to a breakout through $10 that triggers a classic inverse head and shoulders pattern for shares. While JNUG's leverage means that it's volatile, gold's trend looks to be clearly up again in 2017. Buyers who can stomach the risk in this ETF should consider jumping in here.
Financial Select Sector SPDR ETF
- Nearest Resistance: $23.75
- Nearest Support: $23
- Catalyst: Technical Setup
The Financial Select Sector SPDR ETF (XLF - Get Report) is another popular ETF that's weighing in as one of the most actively-traded stocks on the market this afternoon. XLF has been looking attractive from a technical setup for the last couple of months, forming a textbook ascending triangle setup that triggers a buy on a push through resistance up at $23.75. Put simply, if XLF breaks through $23.75, we've got a fresh buy signal in this serial outperforming sector. That's good reason to keep a close eye on XLF this week.
- Nearest Resistance: $20
- Nearest Support: $16
- Catalyst: Analyst Upgrade
Twitter (TWTR - Get Report) is seeing big volume buying this afternoon, up slightly following an upgrade from BTIG ahead of fourth-quarter earnings. BTIG hiked Twitter to buy from neutral, putting a price target at $25 thanks in part to President Trump's active use of Twitter as a validation of the platform's importance. Twitter is scheduled to announce its fourth quarter results tomorrow morning before the open.
Twitter actually looks attractive from a technical standpoint, something that couldn't be said just a few months ago. Shares have found consistent support at $16, a price level that shares last bounced off at the end of January. As long as earnings don't introduce a major negative surprise tomorrow, Twitter looks like a buying opportunity here.
Cognizant Technology Solutions
- Nearest Resistance: $58
- Nearest Support: $52
- Catalyst: Q4 Earnings
Shares of Cognizant Technology Solutions (CTSH - Get Report) are seeing a shot in the arm this afternoon, boosted by fourth quarter earnings that came in above expectations. Cognizant earned adjusted profits of 87 cents per share, slightly beating the 86-cent consensus from analysts. More importantly, the firm sees revenue for the quarter ahead above forecasts, and announced a plan to buy back $3.4 billion in shares. Cognizant is up 4.1% on high volume as I write.
Technically, Cognizant has been looking constructive since its October lows. Shares have been testing resistance up at $58, a price level that, if exceeded, opens shares' upside towards a test at prior highs set last year. From a risk management standpoint, it's a good move to wait for Cognizant to clear $58 before pulling the trigger on this IT consulting stock.
AMC Entertainment Holdings
- Nearest Resistance: $33
- Nearest Support: $30
- Catalyst: Offering
Finally, mid-cap movie theater owner AMC Entertainment Holdings (AMC - Get Report) is down 4.4% on high volume this afternoon, dropping after announcing a $579 million share offering to repay bridge loans used to acquire Carmike Cinemas and to finance part of its acquisition of Nordic Cinema Group. Shares are backsliding on the dilution, as well as an upsizing. The offering priced at $31.50.
From a technical standpoint, AMC is continuing a breakdown after violating trendline support earlier in the week. With that uptrend over in AMC, shares have additional downside risk ahead in the near-term. It makes sense to avoid the long-side of AMC until shares find some semblance of support from here.