4 Hot 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.

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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.

Alcatel-Lucent

Nearest Resistance: $4

Nearest Support: $3.50

Catalyst: Earnings Surprise

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French communications stock Alcatel-Lucent (ALU) is up close to 15% this afternoon following the release of the firm's third-quarter earnings numbers. ALU has been struggling in recent quarters, but management was able to trim its losses by cutting costs. The firm ended up losing 200 million euros for the quarter, down from 316 million euros a year ago.

From a technical standpoint, Alcatel-Lucent has been on fire since the start of the summer, pushing higher in a well-defined uptrend. While today's jump is huge, it's still short of resistance at $4; traders will need to see that price ceiling get taken out before it makes sense to be a buyer here.

Avon Products

Nearest Resistance: $19.50

Nearest Support: $17

Catalyst: Earnings/Bribery Settlement

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Cosmetics maker Avon Products (AVP), on the other hand, is getting shellacked this afternoon on the heels of its earnings release. AVP reported third-quarter earnings of 14 cents per share, falling short of Wall Street's 19-cent consensus estimate. Worse, the firm announced that a bribery probe settlement proposed by the SEC was likely to come with penalties that would be much larger than expected -- enough to materially impact the business. AVP is off by more than 22% as I write this afternoon.

The technical outlook doesn't look much better. AVP broke support at $20 on this morning's gap-down, falling to a $17 support level that hasn't been tested since back in February. AVP was trending lower to begin with, and today's breakdown is icing on the cake. I'd recommend keeping clear of this name for the foreseeable future; don't try to catch the falling knife.

MGM Resorts International

Nearest Resistance: $20

Nearest Support: $17

Catalyst: Earnings Miss

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MGM Resorts International (MGM) reported its own earnings miss to Wall Street this morning, losing 7 cents per share for the quarter. That's three cents shy of the 3-cent loss that analysts were expecting. MGM is capping off a stellar 65% year-to-date rally with a 6% earnings-induced drop today, and the decline could deepen before we reach year end.

That's because MGM's drop this morning marks the official beginning of a downtrend in the casino stock. Shares had been holding firm at $20 support, but that broke definitively this morning. From here, $17 looks like the next spot where MGM could see another glut of demand, but I'd recommend staying away until the downtrend can actually get snuffed out.

Expedia

Nearest Resistance: $66

Nearest Support: $54

Catalyst: Earnings

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Last up is Expedia (EXPE). The $8 billion travel site is up more than 16% in this afternoon's session following better-than-expected earnings released after the bell yesterday. EXPE reported third-quarter earnings of $1.43 per share, an improvement on the $1.35 average guess that analysts were hoping for. That's yet another year of double-digit growth for Expedia, and it's giving investors another excuse to look at this stock after a volatile year of trading.

Today's big gap up breaks the sharp downtrend that's been in force since July's highs, but shares are still down from the high-water-marks set back in the first quarter. Investors should keep a close eye on how EXPE reacts to resistance at $66; if shares can catch a bid above that past price ceiling, it's a strong buy signal for shares.

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 CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji