5 Stocks to Trade for Breakout Gains
Now, with sentiment turning on traders, it makes sense to look outside the box for trading opportunities. That's why we're turning to Twitter today to find five new names worth trading.
Since its introduction, the microblogging tool has been popular among traders looking to share investment setups with the trading community. Today, with 300 million users, it's reached a level of popularity that makes it an even more useful resource for investors looking to generate trading ideas in 140 characters or less.
Brevity has been a big part of Twitter's success -- and a reason for the service's popularity among traders. After all, it doesn't take more than a few seconds to blast off a tweet about your latest trade, or thoughts about a significant market move. Third-party services such as StockTwits also aggregate stock market tweets in real time, providing an interesting sentiment gauge or an instant opinion on your latest position.
The Twittersphere heated up this summer when it was announced that a $40 million London-based hedge fund was now applying algorithms to Twitter to generate trading signals. That fund launch comes not too long after researchers at Indiana University, Bloomington found that Twitter could predict up or down days with 87.6% accuracy.
While there are still some issues with relying too heavily on Twitter for trading signals (a model with high predictive ability isn't necessarily economically viable), the site can be a good starting point for traders looking for stocks getting attention from the investing community. With that in mind, let's look at technical setups in five stocks and ETFs that are popular on Twitter this week.
For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
Here's a look at five Twittersphere technical setups that could deliver breakout gains to your portfolio this week.
If any stock is getting positive attention right now, it's Priceline.com(PCLN) -- shares of the $38 billion travel stock have been on fire in 2012, rallying more than 63% year-to-date. And that upside momentum isn't showing signs of abating at this point.
Priceline broke out above a minor resistance level on Monday, sending a message to traders that buyers are still clearly in control of shares. This stock is one particularly gleaming example of a name that's rallying in spite of market weakness in the very short term. For that reason, it's a stock that anxious investors are turning to in search of strength. Now Monday's breakout provides newcomers with a relatively low-risk entry point.