How to Trade Monday's Most Active Stocks: BofA, Vale, Zeltiq, Teva and 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 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.

Bank of America

  • Nearest Resistance: $23.50
  • Nearest Support: $22.50
  • Catalyst: Technical Setup

Leading off the list of the market's most active trades is $235 billion banker Bank of America (BAC) . BofA is up slightly on big volume this afternoon, boosted by a technical setup that's continuing to play out in shares. Bank of America has spent all of 2017 forming a textbook example of an ascending triangle pattern, a bullish continuation setup that triggers a buy on a confirmed move through resistance up at $23.50. Put simply, if BofA can hold a move above that $23.50 level this week, we've got a brand-new buy signal in this big financial stock. Stay tuned.

Vale SA

  • Nearest Resistance: $12.50
  • Nearest Support: $9.50
  • Catalyst: Iron Prices

Shares of Brazilian metals company Vale SA (VALE) are up more than 8% this afternoon, boosted by iron ore prices above $90 a ton for the first time in years. Investors are counting on seeing some of the fruits of those price improvements when Vale reports its fourth-quarter earnings on Feb. 23.

Long term, Vale's uptrend is still alive and well. Shares have been making a well-defined series of higher lows since last August, and today's big move higher is occurring within the context of that bullish price move. Keep an eye out for earnings as the next big potential catalyst in this stock.

Zeltiq Aesthetics Inc.

  • Nearest Resistance: $56.50
  • Nearest Support: $55.55
  • Catalyst: Acquisition

Small-cap medical technology stock Zeltiq Aesthetics Inc. (ZLTQ) is up almost 13% this afternoon, boosted by news that the firm is being acquired for $56.50 in cash by Allergan plc (AGN) . The deal is expected to close by the end of the year, and the tiny 1.59% price discount left in shares of Zeltiq as I write this Monday indicates that Wall Street is pricing in a 93% probability that the deal gets done. That means that the money has basically already been made on the Zeltiq trade at this point. Investors should look elsewhere for upside opportunities in 2017.

Teva Pharmaceutical Industries Ltd.

  • Nearest Resistance: $34
  • Nearest Support: $32
  • Catalyst: Q4 Earnings

The $34 billion pharma firm Teva Pharmaceutical Industries Ltd. (TEVA) is getting a shot in the arm to start the week, up almost 4% as I write on Monday afternoon following the firm's fourth-quarter earnings call. The Q4 profits came in at $1.38 a share, slightly besting the average consensus of $1.35 on Wall Street. The firm also said it's looking at options to pay down debt and increase its cash cushion, including a possible spinoff of Teva's branded generics unit.

Teva's price action has been under pressure for much of the last year, and the long-term trajectory still looks shaky here. That's because TEVA is forming a descending triangle pattern, a bearish continuation setup that's formed by horizontal support down at $32 and downtrending resistance to the topside. Despite today's bounce higher, you don't want to own Teva if shares violate $32.

Sprint Corp.

  • Nearest Resistance: $12
  • Nearest Support: $8.25
  • Catalyst: Verizon Announcement

Phone carrier Sprint Corp. (S) is down slightly on active volume Monday afternoon, following the announcement from larger rival Verizon (VZ) that the telco concern will be introducing an unlimited data plan in a bid to fight off price competition from Sprint and other smaller carriers. The announcement is a negative for Sprint, whose marketing has hit incumbent carriers hard on the fact that they don't offer unlimited data to consumers.

Still, while Sprint is down about 1.5% this Monday afternoon, it looks more like a buying opportunity than a reason to panic. Shares are testing trendline support, potentially catching a bid on an uptrend that's been in force since the summer. The next bounce higher is a buy signal in Sprint.

iPath S&P 500 VIX Short-Term Futures ETN

  • Nearest Resistance: N/A
  • Nearest Support: N/A
  • Catalyst: New Highs

New highs in the S&P 500 are translating into new lows for the iPath S&P 500 VIX Short-Term Futures ETN (VXX) . VXX is down about 2% on strong volume today, spurred by the fact that the S&P is yet again pushing into record territory. The VIX's inverse correlation with the S&P means that, as the broad market goes up, VXX goes down. It doesn't make much sense to bet against this trend at this point.

An important note about this exchange-traded note is the fact that VXX doesn't have conventional support and resistance levels like a normal stock. Since the price action in VXX is determined by a statistical formula, not directly supply and demand from market participants, it's important not to try to use conventional technical tools on this unique exchange-traded note. But, as long as the uptrend in the S&P remains intact, you don't want to own VXX.

ArcelorMittal

  • Nearest Resistance: N/A
  • Nearest Support: $8.75
  • Catalyst: Metals Prices

Finally, ArcelorMittal (MT) is seeing a big-volume pop this afternoon, up 4.3%, thanks to the upward pressure in metals prices overnight. MT has been rallying hard in the last few sessions, but today's price move is different: it's triggering a breakout through resistance up at $8.75. That means, despite the size of MT's move higher over the last few months, we're getting a fresh buy signal in this stock here. If you haven't already taken advantage of the bullish trend in steel, it's not too late to pull the trigger in February.

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

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