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: $38
- Nearest Support: $36
- Catalyst: Bidding Drama
Yahoo! (YHOO) is another big tech stock that ended the week on elevated trading volume. Shares of this $34 billion internet stock corrected slightly in the last few sessions, giving back some ground on rumors that bidding prices for its core business could come in at $2 to $3 billion, significantly lower than the numbers that most Wall Street analysts were expecting. Those lower bid rumors have been disputed, however, and Yahoo!'s share price saw some swings last week as a result.
Ultimately, the technically story in this stock is a little more clear-cut. After rallying hard out of February's lows, Yahoo! is beginning to look "toppy" thanks to a pretty classic reversal pattern. If the stock violates support at $36, then shares could open up material downside risk from here.
- Nearest Resistance: $5.50
- Nearest Support: N/A
- Catalyst: Supply Pact
Shares of oil and gas service company Weatherford International(WFT) - Get Report were under considerable pressure last week, as Wall Street got anxious about this big energy stock's deal with frack sand producer Hi-Crush Partners (HCLP) . Hi-Crush modified its supply pact with Weatherford, giving the firm a temporary pricing discount in exchange for a longer-term supply contract -- and some investors took that as a liquidity issue at Weatherford.
Regardless of what's really going on, the technical picture at Weatherford doesn't look great here. Shares violated an important support level at $5.50 last week, clearing the way for a potentially long-lived move lower. Avoid the temptation to try and call the bottom in this beaten-down energy stock.
- Nearest Resistance: $17
- Nearest Support: $14
- Catalyst: Technical Setup
Things aren't looking great in shares of Twitter(TWTR) - Get Report right now. In spite of a nearly 2% pop on Friday, this big social media stock has been forming a long-term bearish technical price setup since February, posing the risk of an even bigger leg lower in the second half of 2016.
Twitter is testing key support at $14 heading into this coming week. If shares violate that $14 line in the sand, then this microblogging platform becomes a sell.
From a fundamental perspective, Twitter is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio. The portfolio rates the stock a Three, meaning it would sell shares on strength.
- Nearest Resistance: $4
- Nearest Support: $3.40
- Catalyst: Loan Progress
After plummeting earlier this month after a series of weak internal reviews spurred the surprise resignation of CEO Renaud Laplanche, LendingClub(LC) - Get Report continues to be a volatile stock. The firm ended the week nearly 8% higher, following rumors that Jefferies Group is working with the company to find purchasers for LendingClub's loans. The potential for new investors in LC's portfolio of loans is helping to drive some buying back into shares, but this stock remains far from where it started the year.
Technically, LendingClub looks like it's finding support down between $3.40 and $4, but that newfound support range isn't enough of a price floor to justify a buy signal for anyone but the most speculative of buyers at this point. If LendingClub can catch enough of a bid to move above $4, that changes.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.