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.
Bank of America
Nearest Resistance: $16.75
Nearest Support: $16.20
Catalyst: Technical Setup
Bank of America (BAC) - Get Report is seeing big volume for technical reasons this afternoon, as shares bounce off of a key support level at $16.20. BofA looked "bottomy" back at the start of this month, and the breakout through that $16.20 level signaled that buyers had taken control of shares. This week, a throwback to re-test newfound support is giving late-to-the-game traders a second chance at a low-risk entry.
If you're looking for an opportunity to buy BAC, the next bounce off of support looks like a good time to do it from a risk/reward standpoint. I'd recommend parking a protective stop on the other side of the 200-day moving average, which has been a pretty good proxy for support in 2015.
Nearest Resistance: $8
Nearest Support: $7
Catalyst: Analyst Downgrades
Brazilian metals miner Vale (VALE) - Get Report is down 4% on big volume this afternoon, swatted lower by a series of analyst cuts across the iron ore industry. Morgan Stanley cut Vale to underweight with a price target of $6.30, implying a 16% downside risk from today's prices. Analysts are concerned that pressure on ore prices could swat margins 20% lower this year, spurring additional dividend cuts.
From a technical standpoint, downside in VALE is nothing new. While shares were showing some bullish undertones heading into February, the downtrend in this stock is very much intact here. With shares coming down from the top of the trend line, it makes sense to stay away from the long side of VALE this week.
Nearest Resistance: $33
Nearest Support: $29
Catalyst: Merger Rumors
Discovery Communications (DISCA) - Get Report is seeing a big-volume move higher this afternoon, following rumors that 21st Century Fox (FOXA) - Get Report is in talks to buy it. While both firms have denied that they're in talks to merge, DISCA is holding onto at least some of its gains this afternoon, testing a breakout through the key $33 level.
At this point, it doesn't look like that $33 price tag will be cleared today, but shares are very close to breaking out above their downtrending channel. A move above $33 is the technical buy signal that traders should stay on the lookout for.
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, author had no positions in the 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 that 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