Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generatinginvestment ideas. Instead, let the crowd do it for you.
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.
Groupon
- Nearest Resistance: $2.90
- Nearest Support: N/A
- Catalyst: Q3 Earnings, CEO Change
Online deal site Groupon (GRPN - Get Report) is getting shellacked this afternoon, down almost 30% as I write, following the firm's third-quarter earnings numbers. While earnings were positive for the third quarter, Groupon reported worse-than-expected sales numbers for the coming quarter and announced that it was replacing its CEO for the second time in two years. COO Rich Williams will take the top spot at Groupon effective immediately.
From a technical standpoint, Groupon's chart looks broken. This stock has been in a downtrend all year long, shedding about 65% of its market value since the beginning of 2015. Today's big gap down puts Groupon back at the bottom of its downtrend -- or potentially below it. Buyers should steer clear of this one until Groupon can form some semblance ofsupport again.
Chesapeake Energy
- Nearest Resistance: $9
- Nearest Support: $6.75
- Catalyst: Q3 Earnings
Mid-cap energy stock Chesapeake Energy (CHK - Get Report) is giving back about 5% this afternoon, after posting its own third-quarter earnings numbers. Chesapeake posted a $7.08-per-share loss, a number that got hammered by billions of dollars in writedowns for oil and gas fields. Excluding those one-time items, Chesapeake's loss was 5 cents per share, which came in less than the 13.6-cent loss that analysts were expecting.
Technically speaking, Chesapeake actually looks pretty attractive in the long-term. Shares have been making higher lows since late August, as this stock has tested $9 resistance multiple times. While today's earnings-driven decline isn't ideal for investors, it doesn't change the long-term view in shares. A breakout above $9 would be an important buy signal in Chesapeake Energy.
U.S. Steel
- Nearest Resistance: $13
- Nearest Support: $11
- Catalyst: Q3 Earnings
U.S. Steel (X - Get Report) is another big commodity-driven name that's seeing a double-digit decline on earnings results for the third quarter. Shares of this $2 billion steel producer are down 13% Wednesday, after the company reported a bigger-than-expected loss of 70 cents per share. Analysts had, on average, been looking for U.S. Steel to lose 19.6 cents for the quarter.
But even though U.S. Steel is correcting this afternoon, shares actually look constructive in the intermediate term. U.S. Steel has spend the last month and change forming an ascending triangle pattern, a bullish price setup that's formed by uptrending support to the downside and a horizontal resistance level above shares at $13. A breakout above that $13 price ceiling makes U.S. Steel a high-probability buy once again.
Michael Kors Holdings
- Nearest Resistance: $45
- Nearest Support: $38
- Catalyst: Q2 2016 Earnings
Fashion company Michael Kors Holdings (KORS - Get Report) is rallying on its fiscal second-quarter earnings release this afternoon, up more than 13% as I write. Michael Kors reported higher-than-expected profits for the quarter, earning $1.01 per share. Analysts were looking for profits of 89 cents on average. The earnings results mark this stock's second straight positive earnings reaction after shares lost a quarter of their value on fourth-quarter 2015 numbers.
Despite the pop in shares, it's a little early to be a buyer in this big fashion stock. Shares have been getting squeezed by downtrending resistance since the beginning of the summer, and until they can break out of that descending triangle, a downside breakdown below $38 support remains a big risk.
By Jonas Elmerraji
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