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: N/A
Nearest Support: $64
Catalyst: FDO Offer
Discount retailer Dollar General (DG) moved 11.6% to start the week, following news that the firm had made a $78.50 per share cash bid on rival Family Dollar Stores (FDO) . That news is significant because FDO was already has an acquisition offer on the table from Dollar Tree (DLTR) , and it confirms rumors that began circling on Aug. 5. Investors are clearly happy about the prospects of a larger dollar chain -- the move shoved DG to new highs at the open on Monday.
New highs are significant from an investor psychology standpoint because they mean that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses. If you decide to buy here, keep a tight stop in place.
Nearest Resistance: $80
Nearest Support: $76
Catalyst: Dollar General Offer
On the other side of the big Dollar General offer is acquisition target Family Dollar Stores (FDO) , the name that's caught in the middle of a tug of war that's throwing off cash. FDO popped nearly 5% in yesterday's session on the offer news, adding onto a share price that's been gapping higher consistently since the beginning of June. And now, shareholders are speculating about more bid coming down the pipeline.
That's the reason for the $1.30 premium over DG's offer price tacked onto shares of Family Dollar at the close yesterday. While FDO's technicals look bullish because of buyers' eagerness to pile into this stock this week, there's an important fundamental anchor in the current $78.50 high bid. The event risk is too high to trade in FDO at this point, but DG's chart looks solid here.
Nearest Resistance: $3.25
Nearest Support: $2.75
Catalyst: Seeking Alpha Comments
Shares of online video game maker Zynga (ZNGA) gained close to 6% to start the week, boosted by research published on Seeking Alpha that argued Zynga could now be a good speculative play after the huge decline shares have seen over the last few months. Year-to-date, shares of ZNGA are down 19%.
From a technical standpoint, Zynga's stock still looks toxic, but it's showing some signs of life. $3.25 is the line in the sand that traders should be watching right now. If shares can break out above that long-term resistance level, than the protracted downtrend is over. But I'd recommend staying far away from the long side of this stock until that condition gets met; shares have failed at $3.25 three times since June.
Nearest Resistance: $32
Nearest Support: $29
Catalyst: S&P 500 Removal
One name that wasn't able to take advantage of yesterday's upside was Rowan (RDC) , a name that stayed flat on massive volume yesterday, attention that was driven by the stock's removal from the S&P 500 index. RDC officially left the S&P after the market's close on Monday, moving to the S&P MidCap 400, and spurring huge re-allocations among index funds during the session yesterday.
Charts don't get much uglier than the one in RDC. This name has been selling off since last October, bouncing its way lower in a well-defined downtrending channel. Lower ground looks a lot more likely at this point than a reversal. Buyer beware.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.