Sunday, January 19, 2014

3 Big Stocks to Trade (or Not)

BALTIMORE (Stockpickr) -- 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.

>>5 Rocket Stocks to Buy This Week

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

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These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.

Without further ado, here's a look at today's stocks.

Pandora Media

Nearest Resistance: $22

Nearest Support: $18

Catalyst: Earnings

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Pandora Media (P) was one of the highest-volume stocks on the NYSE on Friday, down double-digits on the firm's earnings results. While the firm's 4-cent earnings per share for the quarter came in at double analysts' estimates, guidance wasn't what market participants were hoping for, and they're selling.

Despite the setback last week, a glimpse at Pandora's chart shows that all isn't exactly lost. This stock is still in a well-defined uptrend that's got a reasonably good proxy for support just below the 50-day moving average. If you're looking to build a position in Pandora, I'd suggest waiting for the next white-bar day and buying.


Nearest Resistance: $12.50

Nearest Support: N/A

Catalyst: Earnings, Analyst Comments

>>5 Big Trades You Can't Miss

Aeropostale (ARO) is a post-earnings trainwreck after it announced second quarter numbers after the bell yesterday. The stock got flooded with negative comments from analysts after releasing its numbers, with some suggesting that financial distress could be a real concern if ARO stays unprofitable as long as they expect. Morgan Stanley puts the firm's bear case price target at $2, which is nearly an 80% drop even from here.

As bad as the fundamentals look for ARO, the technicals look even worse. Shares broke support a week ago, and have been in free-fall ever since. Friday's selloff only accelerates the drop. This is the definition of a "falling knife". Don't try to catch the bottom in ARO.


Nearest Resistance: $15

Nearest Support: $13.50

Catalyst: Emerging Markets Bounce

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A bounce in a basket of beaten-down emerging markets late last week helped to spur huge trading volume in Brazilian oil firm Petrobras (PBR). PBR has had a rough year in 2013, dropping 23% on weakness in the global economy coupled with a strong dollar. But shares bottomed in July and have spent the last few weeks consolidating in a rectangle with resistance at $15. While shares flirted with a $15 breakout on Friday, it wasn't confirmed. If we see PBR hold above that level, consider it a buy.

If you decide to buy PBR on a $15 move, you'd better be nimble. While this stock sports an upside target around $19, it's still a bullish setup within the context of a long-term bearish trend. I wouldn't want to be caught long for too long in PBR this summer.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


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

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

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