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/
- Nearest Resistance: $0.14
- Nearest Support: $0.08
- Catalyst: Study Failure
Shares of small-cap biopharmaceutical stock Mast Therapeutics (MSTX) are topping the NYSE's list of most-active issues this afternoon, following a failed phase 3 study for the firm's sickle cell disease treatment. Shares of Mast are down more than 81% this afternoon, free falling after the firm said that it expects to abandon clinical development of its vepoloxamer drug, shifting attention and resources to other treatments in its pipeline.
At this point, Mast's price chart is broken. Shares violated their long-term uptrend with today's selloff, and where shares settle from here is anybody's guess. Even the most speculative traders should avoid shares until Mast can re-establish some semblance of support again.
Bank of America
- Nearest Resistance: $17.50
- Nearest Support: $15
- Catalyst: Technical Setup
Bank of America(BAC) - Get Report is tipping the scales as one of the most actively traded stocks on the market this afternoon, getting attention as shares consolidate in September following an important technical breakout last month.
Sideways consolidations aren't uncommon following big upside moves -- and as long as BofA holds above $15 support, this stock's technical trajectory remains to the upside. Now still looks like a good opportunity to build a position in Bank of America before it initiates its next leg higher.
- Nearest Resistance: $4.40
- Nearest Support: $3.70
- Catalyst: Goldman Conference
Shares of Frontier Communications (FTR) - Get Report are correcting 2.4% on big volume this afternoon, following the firm's guidance update at the Goldman Sachs Communacopia Conference in New York. Frontier still expects 2017 EBITDA to be in excess of $4 billion, a number that's more or less in line with analysts' projections for the year ahead. Despite the strong numbers, shares are continuing their multi-month correction this week.
Frontier has been stuck in a parabolic downtrend for most of 2016, rolling over as shares move down to retest the lows set back in January. That bearish technical trajectory isn't showing any signs of turning around at this point. For that reason, it makes sense to avoid getting on the long side of Frontier until shares can start establishing some higher lows and highs again.
- Nearest Resistance: $21
- Nearest Support: $16.50
- Catalyst: Analyst Note
Micron Technology(MU) - Get Report is up 3.4% on big volume here, boosted by an analyst note from Nomura that suggested Micron is likely to cooperate with China's national computer memory company, Changjiang Memory Technology, for NAND production. If true, the deal would come with a substantial investment from the Chinese government to build memory fabrication facilities in the country, boosting Micron's output materially.
From a technical standpoint, Micron looks excellent right now. Shares have been in a well-defined uptrend since mid-May, bouncing higher on every successive test of trendline support. Investors should look for a buying opportunity the next time Micron corrects to the bottom of its uptrend channel.
Direxion Daily Gold Miners Index Bull 3x ETF
- Nearest Resistance: $36
- Nearest Support: $20
- Catalyst: Spot Gold
Gold is on the rebound this afternoon -- and the Direxion Daily Gold Miners Index Bull 3x ETF(NUGT) - Get Report is one of the most popular ways to play the trend. NUGT is a triple-leveraged gold miner fund, and it's up 9.5% on big volume as metals prices bounce higher this week.
Looking at the chart, NUGT is establishing a new support level this month, after violating its 2016 uptrend back in August. That newfound support line means that gold prices could still have materially higher to move in 2016, even if the trend is slightly less aggressive than it's been earlier in the year. This bounce in NUGT looks like a low-risk, high-reward buying opportunity for gold bulls.
Starwood Hotels & Resorts Worldwide
- Nearest Resistance: $77.25
- Nearest Support: $76.47
- Catalyst: Merger
Starwood Hotels & Resorts Worldwide (HOT) is essentially flat on huge volume this afternoon, getting attention ahead of the firm's planned merger completion with Marriott International(MAR) - Get Report . The deal, which is expected to be completed before the market opens on Sept. 23 will create the world's largest hotelier, and it will hand Starwood shareholders $21 a share in cash plus 0.8 shares of Marriott's stock for every share they own.
Right now, Starwood effectively trades at its deal price, leaving little in the way of upside for late-to-the-game traders. That said, the stock component of the deal has meant that HOT effectively mirror's Marriott's stock price action -- and it's been in an uptrend. Marriott's shares still look like a good way to take advantage of the deal in the months ahead.
- Nearest Resistance: $100
- Nearest Support: $87.50
- Catalyst: Analyst Note
Netflix(NFLX) - Get Report is correcting on big volume today, down almost 4% following a cautious analyst note from big-data analytics from M Science. The firm sees churn and smaller net domestic subscriber additions than Netflix forecast for the third quarter as potential challenges to the company. Investors will get to see if those concerns hold weight next month, when Netflix reports its official numbers.
Long-term Netflix is "coiling," bouncing between a pair of converging trend lines in a symmetrical triangle pattern. As shares constrict in that range, volatility has been dropping, a fact that makes a more substantial breakout from the pattern look likely here. The direction shares break from the pattern will dictate the direction you'll want to bet on for this trade. A breakout above $100 is a buy signal for Netflix, while a violation of support at $87.50 opens shares up to more downside risk.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.