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: $1.45
- Nearest Support: $0.25
- Catalyst: Bankruptcy Loan Negotiations
Shares of beleaguered solar stock SunEdison (SUNE) ended the week on a sour note, closing down 39% on Friday following reports that the firm was talking with creditors about a loan to survive bankruptcy reorganization. The firm's disclosure that there's no assurance it will be able to secure the financing, scaring investors with the odds that shares could become worthless or close to it.
From a technical standpoint, the risks of failing to navigate the bankruptcy process outweigh the upside right now. For all but the most speculative of traders, it makes sense to avoid this stock.
- Nearest Resistance: $13
- Nearest Support: $7
- Catalyst: Secondary Offering
UK-based contract driller Ensco (ESV) saw shares tumble 6.5% on Friday, swatted lower by the announcement of a secondary share offering for 57 million class A shares. The firm expects the deal to price at $9.25 per share, and plans on using the proceeds to help weather the downturn in demand for drilling services amid low oil prices. More worrying for investors than the dilution is the fact that management feels the need to raise cash at this point by upsizing its offering.
From a technical standpoint, Ensco's price action is under a lot of pressure right now. Shares have been in a prolonged downtrend for the last year and change, and that downtrend isn't showing any signs of letting up. Worse, shares could tumble to $7 without even altering its technical trajectory. Ensco is an energy name you don't want in your portfolio this spring.
Direxion Daily Gold Miners Bear 3x ETF
- Nearest Resistance: $7.50
- Nearest Support: $2.00
- Catalyst: Spot Gold Rebound
Gold bears are being punished this month -- and none more clearly than the ones who opted to buy the Direxion Daily Gold Miners Bear 3x ETF (DUST) - Get Report . DUST ended the week as one of the most heavily traded issues on the NYSE, shedding 8.3% in Friday's trading session.
DUST has been an abysmal performer as gold prices have rebounded, and gold miners' share prices have rallied even harder. In the last month, this ETF has lost more than 40% of its market value. With this chart still stuck in breakdown mode here, it makes sense to stay away from DUST this spring.
- Nearest Resistance: $9.50
- Nearest Support: $8.25
- Catalyst: Q1 Earnings
Regions Financial (RF) - Get Report climbed more than 13% last week, ending the week on a high note following a better-than-expected first quarter earnings result. Regions reported first-quarter profits of 20 cents per share, besting analysts' expectations by a penny on average.
Technically speaking, Regions has been in "breakout mode" for the last few sessions, since trading above resistance at $8.25. From here, $9.50 looks like the next potential pocket of resistance that buyers will need to content with, which leaves some upside room on tap in the week ahead.
- Nearest Resistance: $36
- Nearest Support: $26
- Catalyst: Hard Drive Market
Shares of hard drive maker Seagate Technology (STX) - Get Report got shellacked last week, pummeled lower following the firm's preliminary third-quarter numbers, which came in below expectations on weak demand from its core PC business. Fewer computers using conventional disk drives has been a major headwind for HDD manufacturers that have been slow to transition into solid state drives -- and Seagate's feeling the consequences of that headwind this week.
Technically, it's still make-or-break at Seagate. Shares sold off to test prior support at $26, a price floor that, if violated, opens the door to substantial downside risk from here. On the flip side, if Seagate can catch a bid here at $26, shares are likely to rebound. Even though Seagate closed slightly below $26 on Friday, it's not a material move just yet.
- Nearest Resistance: $13.75
- Nearest Support: $12
- Catalyst: Technical Setup
The price action in Ford has been ruled by the technical factors in 2016, trading in between resistance up at $13.75 and support down at $12. That's still the trading range in play right now. Ford bulls waiting for an upside move should wait for this stock to move above $13.75 before clicking "buy."
- Nearest Resistance: $12.44
- Nearest Support: $12
- Catalyst: Acquisition
Small-cap communications tech stock Polycom (PLCM) ended the week on big volume, raking among the most heavily traded names on the Nasdaq following an acquisition agreement from Mitel Networks (MITL) - Get Report . Mitel will pay $3.12 in cash plus 1.31 shares of its own stock for each share of Polycom held. As of Friday's close that puts this deal's value at $12.44 per share.
Polycom investors have been playing the waiting game for a while now. Reports broke a month ago that buyout talks were in progress, but the official announcement only finally hit Friday. That said, that money has already basically been made on this trade. The merger premium left in shares of Polycom doesn't present much upside opportunity for investors at this point.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.