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A Guide To Trading Some Of The Biggest Stocks On The U.S. Market Now

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A Guide To Trading Some Of The Biggest Stocks On The U.S. Market Now

There are several big stocks that can be traded for considerable gains in the markets right now. 

We know by now that all the company summary reports and 10-K filings for the fiscal year have been submitted to the SEC (Securities and Exchange Commission). 

The user-defined metrics utilized to filter the stocks at all levels must by now be blurring the eyes of investors as they seek out opportunities. 

In an endeavor to step outside the more traditional ways of kick-starting investment ideas, it is time to test a new theory of allowing the instincts of the crowd to guide and possibly decide for one.

Crowdsourcing is a modern business term embracing the concept of flexible idea management via a crowdsourcing platform. 

The knowledge and instincts of the masses are often unerringly accurate. 

The premise for this attitude is:

  • Social media reflects general opinion
  • Public opinion can be tapped via social media.

In the past, views of employees, suppliers and colleagues were sought out for their opinions and predictions. 

Now the process of obtaining needed information services are sought out from the online community. 

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There are many market participants:

  • Hedge funds
  • Individual investors
  • Professional speculators
  • Fund managers

They are all relying on social media to guide investors as to what stocks are favored and possibly set to rise. 

Identifying these emerging market trends is never an individual perspective. 

Previously viewed as the domain of the advertising industry, it is now seen as an entirely practical investment tool too. 

The markets have always been driven by supply and demand, in its most basic form, and it can only be a proper indication to scope out what company names are trending there in the crowd. 

A few fund managers are already attempting to utilize social media platforms like Twitter to help form possible trading opportunity algorithms. 

Crowdsourcing seems to work best for most investors when they use it as a starting point for guideline investment analysis.

Taking a few examples of active stocks and leveraging the opinion of the crowd, we will see if this is a legitimate investment tool for the markets.

The chart below shows the iPath S & P VIX Volatility Index short term futures. 

The stocks were traded heavily, and VXX tracking the movement of the volatile stocks showed a sharp decline. 

With the news of the military coup attempt in Turkey, however, the VXX will likely start off the week with higher trades as the story of the political instability drives the market sentiment. 

guide-to-trading-1

The lowering VXX trend is clearly seen above.

The VXX doesn’t have normal resistance levels and support like ordinary stocks do. 

All price action displayed in the VXX is analyzed using a statistical formula. 

Direct demand and supply from market participants did not factor in. 

The use of more conventional technical tools is not in play when the exchange traded note are entered here.    

For this reason, and for as long as the S&P uptrend stays intact, it is recommended to stay away from owning VXX.

Moving on to the iShares MSCI Japan ETF (EWJ) for a technical look at trading some significant market shares with an eye on crowdsourcing as a possible market tool. 

Once again we use here as an example, an exchange traded product which performed so well it topped the NYSE’s most purchased list at the end of last week. 

guide-to-trading-2

The driving force behind this high volume performance was technical. 

EWJ has been displaying continued fluctuations for most of 2016 and this particular share price feature is called “coiling.” 

The two converging trend lines, as seen in the above chart, show an ever increasing tightening effect on this fund.

The resolution of this bouncing and converging price action will go one of two ways. 

But it is impossible to venture a conjecture until the shares break out through one of the trend lines. 

As tech is a desirable commodity in the markets, the breakout of the tightening price action will happen swiftly, especially in EWJ. 

In all market performance, volatility is a cyclical process and because of the recent cooling down of the instability of the prices in this chart, it will likely follow that increase will be reported for summer.

Carrying on to chart reports of Rite Aid:

guide-to-trading-3

Rite Aid finished trading last week with 2.5% bigger volume which is a considerable jump when held against previous performances. 

An analyst note is a reason for this increase. 

It listed that there is a 65% chance of the firm’s pending acquisition is to be approved. 

Giant company Walgreens Boots Alliance (WBA) is in talks to have the purchase of RAD (Rite Aid) approved. 

WBA is apparently also talking to the FTC (Federal Trade Commissions – the consumer protection and anti-trust body) regarding the asset sale amount they would need to finish to get a regulatory approval nod. 

Investors are currently pricing in a possible 25% discount against WBA’s US$9 cash offer price. 

That sort of price implies that just a 35% probability exists the deal will get done. 

This data is backed up by Bloomberg, a trusted business and market news, data and analysis engine. 

With that to back it up, it is predicted that Rite Aid will stay bullish with that much money opportunity on the table. 

With all this in the mix, Rite Aid has a free pass to continue moving upward moved the previously listed price of US$8.20. 

Even though the ceiling on the offer price has been fixed at US$9, there is still some push and pull left to maneuver. 

There is some risk outstanding regarding regulatory approval. 

The Rite Aid deal has not yet been struck, but it still stands out as a sweet deal and investment opportunity for any investors with the capacity to handle the volatility. 

The next target for crowdsourced speculation and interest are the slightly controversial company, Herbalife

Herbalife (HLF) rose steeply to reflected 10% higher earnings last Friday. 

This rally was in the teeth of an announcement that the HLF company had reached a settlement with the Federal Trade Commission (FTC) over allegations and disputes over possible pyramid scheme. 

These accusations came into being after short seller Bill Ackerman raised concerns. 

In the public domain and therefore in the public conscious and internet babble as well, there has always been chatter about the ground level business practices and incentives that were a focal point of the firm structure and biggest propeller of sales in this company. 

The heavy emphasis of the product seller being encouraged to recruit as many underlings as possible to also sell the Herbalife products and thereby turning the primary product seller into more of a manager of a stable of employees has been a controversial business design.

Herbalife are set to pay a US$200 million fine. 

This is on the back of the company issuing a claim that anyone could become immensely successful and wealthy by distributing the Herbalife products. 

This is a business model that many companies who target the small start-up business seeker chase after. 

The Federal Trade Commission were not alleging that the Herbalife nutrition stocks US$6 billion were the actual pyramid scheme. 

This is a favorable outcome for the HLF bull futures and has proven enough to propel the shares into the double digits last Friday in the wake of the results. 

This rebound in optimism led to a 52 week high recorded last Friday.

This breakout to new highs, from a technical standpoint, reflects positively on Herbalife. 

It will smooth its pathway towards a potential long term move ever higher in the remaining half of this year.   

That caution is still being evinced which caused the shares to fade somewhat at the end of trading on Friday, means that there is still time to invest in buying the breakout in Herbalife shares.

The next on the list is the Indian IT consulting firm of Infosys (INFY). 

It finished trading at the end of last week with a slump after reported selling off of 9%. 

This activity occurred after cuts to the firm’s projected sales guidance was down for the year 2017. 

This company would like to see its sales in U.S. dollars be set to grow from 11.8% up to 13.8%, but the reported growth target of 10.8% up to 12.3% was instead reported. 

Even though these are just projected figure increase amounts, it was seen in the markets as a possible warning for the future of investments next year. 

This is what drove the market prices to be significantly trimmed down.

Despite these little scares, Infosys’ sell-off hasn’t changed the desirability of the stocks’ technical upward climb. 

Even though the share prices have been stuck in a perceived downturn since April of this year, is not the long term view that this is setting in for a protracted period. 

The outlook for shares in this company will always spin out to a gradual upward trajectory.  Friday’s drop in market interest is only a temporary one. 

With the INFY trading in a down fashion, for now, these levels may be setting in for slightly longer than the actual value of company price would indicate. 

One more market price to check out is the Regions Financial.

  RF has seen quite a bit of rising and fall happening in quick succession over the past few weeks. 

A US$12 billion banking stock was a rather large catalyst for the share price to end on a high volume last Friday. 

This is, in part, because of the board approval to confirm the $640 million stock repurchase plan. 

Representing roughly 5% of Regions Financials’ total market capitalization to date, this approval amounts to a significant percentage of the firm’s value being returned to every shareholder. 

This is seen as a positive move on all investor platforms.

As can be viewed in the below chart, the stock price of Regions Financials usually breaks down with a general trend down. 

This announcement lately generated more action. 

guide-to-trading-4

With the market still absorbing the news this has led to some patterns emerging in the charts:

  • The stock reversed higher
  • The triggering drop was quickly corrected.

This peaking and falling tell an important story. 

If the share price can rise to above the level of $9.25 – Regions Financials could be able to reach new share price highs. 

If stock prices take a bounce downwards, a predicted price fix of around $8 is more likely. 

And to finish, seeing as we are on the subject of crowdsourcing information via the internet, we turn to take a look at Facebook. 

No commentary about social commentary would be complete without it. 

FB keeps bouncing ever higher in its uptrend. 

Reported high volume stocks last week were US$335 billion. 

The stock price action displays a predictable trend of bouncing their way ever higher. 

A test of strength at the bottom end of the channel came back this June. 

Shares of FB made an attempt to break through the price range high peak that was previously set. 

With this in mind, it seems like a good time to stake a claim in FB, especially from the standpoint of risk vs. reward. 

The caution word of advice would be to place a protective stop at the other side of a moving average of 200 days. 

This is what reading the markets from the crowd’s point of view is bringing forward. 

Forget gut instinct and choose herd instinct instead.

 

 

 

 

 

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