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 and market data 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.
So, 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: $65
- Nearest Support: $50
- Catalyst: Apple Lawsuit, Downgrades
Up first on the list today is $78 billion tech firm Qualcomm (QCOM) - Get Report. Qualcomm is getting pummeled on big volume this afternoon, selling off 13% as of this writing following a lawsuit filed by Action Alerts PLUS holding Apple (AAPL) - Get Report on Friday that came on the heels of an FTC lawsuit also announced last week. The legal actions spurred a downgrade from Nomura to neutral today, bringing the firm's price target down to $70.
After a strong rally in the last year, Qualcomm's chart has been showing some serious cracks since late December. Shares violated their uptrend at the end of the calendar year, opening up considerable downside risk in the weeks since -- we're seeing that play out in the size of today's downside move. It makes sense to avoid the long-side of this stock until the selling wears off and shares can establish some semblance of support again.
- Nearest Resistance: $8.20
- Nearest Support: $6.40
- Catalyst: Merger Worries
Rite Aid (RAD) - Get Reportis another big-volume stock this afternoon, following up on Friday's steep selloff after a report from Bloomberg that the FTC may be unwilling to greenlight the firm's pending merger with Walgreens Boots Alliance (WBA) - Get Report , another Action Alerts PLUS holding, even after a proposal to sell 865 Rite Aid stores to Fred's (FRED) . The merger update increases the risk that the deal doesn't get done, hiking the current acquisition premium to 24%.
That price drop implies that Wall Street sees only a 37.6% probability that the Walgreens merger gets pulled off. In the meantime, the headline risk remains very elevated in Rite Aid as shareholders wait for final word from regulatory agencies. It's a stock that's best avoided here.
Direxion Daily Junior Gold Miners Index Bull 3x ETF
- Nearest Resistance: $9
- Nearest Support: $7.50
- Catalyst: Spot Gold, Technical Setup
Shares of the Direxion Daily Junior Gold Miners Index Bull 3x ETF (JNUG) - Get Report are enjoying a high-volume rally this afternoon, up 6.3% as spot gold prices climb. After a prolonged correction since the middle of the summer, JNUG is looking "bottomy" again. Shares have been forming a textbook example of an inverse head and shoulders pattern, triggering with this afternoon's push through $9 resistance. If that $9 breakout holds by today's close, consider it a technical buy signal for this popular leveraged gold ETF.
Financial Select Sector SPDR ETF
- Nearest Resistance: $24
- Nearest Support: $23
- Catalyst: Technical Setup
Another big ETF that's weighing in as one of the most actively-traded issues on Wall Street this afternoon is the Financial Select Sector SPDR ETF (XLF) - Get Report. This big financial sector fund is seeing an active session thanks to a technical setup, as shares ride the lower end of their consolidation range this afternoon. Put simply, if XLF violates support at $23 this week, consider it a near-term sell signal. Otherwise, if this big ETF can break through resistance up at $24, we've got a signal that buyers are back in control of XLF following a multi-month rally.
- Nearest Resistance: $31
- Nearest Support: $29.25
- Catalyst: Technical Setup
General Electric (GE) - Get Reportis in "breakdown mode" this week dropping following a bearish rounding top pattern that's been forming since December. The selling doesn't come as a surprise here -- GE was waving a major red flag last week before the drop actually took place. The violation of $31 support opens the door to more downside ahead. If you're looking for a buying opportunity in GE, wait for sellers to finish unloading their shares before considering stepping in to buy it.
- Nearest Resistance: $11
- Nearest Support: $9.25
- Catalyst: Pre-Earnings Selling
Integrated steel producer AK Steel (AKS) - Get Report is seeing some selling this afternoon, down more than 3% on high volume ahead of the firm's fourth quarter earnings call tomorrow morning. AK Steel has been a strong performer in the last few months, rallying about 70% since the middle of the summer - and much more than that over the long-run. What we're seeing today is simply profit taking ahead of a potential catalyst.
AKS has been consolidating for the last couple of months, putting shares in make-or-break mode this week. If shares materially violate $9.25 support tomorrow following the earnings call, more downside is likely. Otherwise, bullish fourth-quarter earnings could be enough to break shares out for another leg higher in 2017. Stay tuned.
- Nearest Resistance: $13.50
- Nearest Support: $12.25
- Catalyst: Technical Setup
Finally, automaker Ford (F) - Get Report continues to be a consistently high-volume stock this afternoon, down slightly on big volume as shares test trendline support for the fourth time since November. So far, every test of the bottom of Ford's uptrend has provided an attractive buying opportunity for this car stock - investors should wait for Ford to actually catch a bid here at support and bounce higher before adding to any Ford positions in January.
At the time of publication, author was long AAPL.