How to Trade the Market's Most-Active Stocks: RATE, AVNR, NPSP, TAP

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.

Avanir Pharmaceuticals

Nearest Resistance: N/A
Nearest Support: $7
Catalyst: Drug Results

Shares of small-cap drug maker Avanir Pharmaceuticals (AVNR) popped more than 85% on Monday, boosted by positive drug results from its AVP-923 Alzheimer's treatment. The firm announced that the drug improved agitation among patients in a phase II study, bringing the firm's therapy another crucial step closer to commercialization.

AVNR had been looking positive from a technical standpoint for the last year and change, but Monday's nearly doubling of shares intraday means that the uptrending channel that had been corralling shares in 2014 doesn't hold much significance now.

Molson Coors Brewing Company

Nearest Resistance: N/A
Nearest Support: $75
Catalyst: M&A Speculation

Shares of beer brewing giant Molson Coors Brewing Company (TAP) shot up 5.85% on Monday, sparked higher by peer SABMiller's (SBMRY) unrequited bid for Dutch brewer Heineken. The Heineken offer sparked speculation about other industry consolidations, including a possible Anheuser Busch InBev (BUD) for SABMiller. An analyst note from Robert Ottenstein at ISI put a potential upside target on Molson Coors at $95 as a result of the hubbub.

Technically speaking, Monday's breakout in TAP is a big buy signal. Shares had been forming a textbook ascending triangle pattern for the last several months, squeezing against resistance at $75. The breakout above that high-water mark makes buying TAP a high-probability trade.

NPS Pharmaceuticals

Nearest Resistance: $36
Nearest Support: $26
Catalyst: Approval Delay Rumors

Shares of $3.5 billion drug name NPS Pharmaceuticals (NPSP) dropped more than 16% in Monday's session, dragged lower by a note from Jefferies that suggested the firm's Natpara drug approval will likely be delayed past the firm's Oct. 24 PDUFA date. The prolonging of what longs see as the biggest immediate upside catalyst in shares of NPSP sent sellers out of shares.

Meanwhile, nothing really changed technically from the move lower. NPSP has been trading in between horizontal resistance at $36 and an uptrending support line (currently at $26) for the better part of the last year -- shares are still within that range. There's no compelling reason to sell here yet.

Bankrate

Nearest Resistance: $13.50
Nearest Support: N/A
Catalyst: SEC Probe

Financial publisher Bankrate (RATE) dropped more than 13.75% on high volume on Monday, driven down by news that the SEC is conducting an investigation into financial reporting from the first and second quarter of 2012. The firm now says that financial statements from 2011, 2012, and 2013 should not be relied upon, and CFO Edward DiMaria resigned on the news.

Technically, this stock is broken. Shares had been forming a falling wedge for the last year, and Monday's breakdown is the final nail in the coffin. If you haven't done so already, RATE is a sell here. I'd stay away from the long side until shares can establish some semblance of support again.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, portfolios managed by the author were long TSLA. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji

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