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.
Without further ado, here's a look at today's stocks.
Nearest Resistance: $67.50
Nearest Support: $55
Catalyst: Alliance Boots Deal
Drugstore chain Walgreen (WAG) is down more than 12.5% this afternoon on big volume, following news that the firm planned to acquire the rest of pharmacy and beauty retailer Alliance Boots for $15.3 billion in cash and stock. The deal gives WAG significant exposure to overseas markets, though Walgreen announced that it no longer plans on pursuing a tax inversion.
Investors aren't thrilled with the announcement, as evidenced by the big drop in shares of Walgreen this afternoon. This isn't some minor speed bump for WAG's stock: this move just broke WAG below its long-term uptrend. That's a glaring sell signal for shares of this pharmacy chain today.
Nearest Resistance: $7
Nearest Support: $6
Catalyst: Alliance Boots Deal
Rite Aid (RAD) is another big U.S. drugstore chain that's dropping hard on news of Walgreen's Alliance Boots deal. RAD is selling off more than 5.6% as I write on concerns that the increased scale at WAG could make it difficult for Rite Aid to compete with the cost efficiencies and buying power that its newly larger rival would benefit from.
From a technical standpoint, Rite Aid has looked bearish since it broke down below $7 support at the end of July. Now, it's just following the technical cues. The Alliance Boots news is the excuse for the selling, but it's not the real driver.
Twenty-First Century Fox
Nearest Resistance: $36
Nearest Support: $31
Catalyst: Time Warner Bid Withdrawal
Twenty-First Century Fox (FOXA) is up 5% ahead of earnings this afternoon, following news that the firm had withdrawn its unsolicited $75 billion takeover offer for shares of Time Warner (TWX). The news helps to regain some of the lost ground in Fox's shares when the big-ticket offer was originally announced.
While today's move isn't really technically relevant (shares are still within a sideways price range from last year), fourth quarter earnings after the bell today could change that. Look for a move above $36 as a buy signal for FOXA. Otherwise, sell any violation of support at $31.
Nearest Resistance: $82.50
Nearest Support: $72.50
Catalyst: Fox Deal Withdrawal
The other side of the boost in shares of Twenty-First Century Fox is Time Warner (TWX), the target in the scrubbed deal. Time Warner is down 12% on news that the offer got pulled, which is still not a bad outcome considering the fact that shares were lower before the bid went public. Investors are still pricing in the possibility of M&A activity on Time Warner's shares.
That doesn't mean you should buy it. Shares of TWX are trading inside the gap formed by the initial acquisition report. That void could easily provide a lot more downside risk in TWX this month. Wait for some semblance of support to get established before jumping in.
-- Written by Jonas Elmerraji in Baltimore.