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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.
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.
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 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.
Nearest Resistance: $4.50
Nearest Support: $4.30
Catalyst: Share Offering
One stock that’s pushing higher today is Exelixis (EXEL), a small-cap biotech stock that’s up around 3%. Rather than testing new highs, though, it’s bouncing after falling like a brick. Shares are down around 30% in the last week, after shares peaked after news that the FDA was granting the firm’s thyroid cancer therapy a priority review. Then, the selloff accelerated after Exelixis announced a 30 million-share offering at a hefty discount.
While today’s bounce bodes well for the stock (in the short term, it’s causing a Japanese change-of-trend pattern called a “harami”), it’s a bit too early for all but the most nimble traders to try to pick a bottom at this point. If shares can move above resistance at $4.50, the margin of safety is big enough to justify an opportunistic buy for folks who already like this stock.
Exelixis was also featured today in "5 Stocks Under $10 Set to Soar."
Nearest Resistance: $24
Nearest Support: $23
Meanwhile, there is a high-probability trade brewing in shares of media conglomerate News Corp. (NWSA) right now. The firm posted its earnings yesterday, slipping to a loss after a write-off the firm incurred in spinning off its publishing business. Still, investors took the loss in stride, and they’ve been pushing shares higher today despite a much lower open.
So how should you trade it?
Shares of NWSA broke out at the end of July, and they’ve been throwing back for the past few market sessions. A throwback is essentially a return to retest a breakout level (in this case, support at $23). News Corp.’s throwback merely provides investors with a second chance at a low-risk entry. Just keep a protective stop just below $23 support.
Robbins & Myers
Nearest Resistance: $60
Nearest Support: N/A
Catalyst: Merger Agreement
One small-cap stock that’s getting plenty of attention today is Robbins & Myers (RBN), a firm that announced a merger agreement with National-Oilwell Varco (NOV), the latter paying $60 per share in cash for each share of RBN. While that’s spiking trading volume in RBN, there isn’t a trade to be made here.
Unless you’re trying to vie for the 38 cents per share in merger arbitrage opportunity that’s currently priced into RBN.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.