4 Big Stocks Making Headlines -- and How to Trade Them

 

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.

Yahoo!

Nearest Resistance: $41
Nearest Support: $37
Catalyst: Analyst Cut

Shares of Yahoo! (YHOO) are selling off for another session today, following an analyst cut from Bernstein that lowered the stock to "market perform," despite a price target ratcheted up to $42. The analyst downgrade is only part of the story. Friday's violation of support at $41 was a big catalyst for today's 5.3% selloff, and as expected, it's clearing the way down to the next-closest support level at $37.

That doesn't mean that buyers will have an opportunity to get in at $37. Shares could move lower if Yahoo! can't catch a bid there. If that happens, $33 becomes an important downside target.

Alibaba

Nearest Resistance: $90.60
Nearest Support: N/A
Catalyst: Technical Setup

New IPO Alibaba (BABA) is moving lower intraday for a second session today, off around 3.7% this afternoon on big volume. That drop certainly isn't welcome to investors who got in on Friday's debut, but at this point, this stock's failure to catch a bid isn't critical yet.

For buyers looking for a chance to build a position in Alibaba, I'd still recommend waiting for shares to establish some semblance of a trading history before jumping in.

Dresser-Rand Group

Nearest Resistance: $83
Nearest Support: $81.88
Catalyst: Acquisition

Industrial compressor and turbine maker Dresser-Rand Group (DRC) is up 2.6% this afternoon on big volume, following news that the firm was being acquired by Siemens AG for $83 a share in cash. While that move may seem small, that's only because rumors of a possible acquisition began leaking last week, driving shares up near Siemens' offer range before the ink had dried on the deal. Now that the announcement is official, most of the money has already been made on this trade.

There's a small $1 merger arbitrage opportunity in shares as I write, an opportunity that leaves a little meat on the bone for investors who can stomach the event risk of buying here. For the rest of us, it makes sense to move on.

Petrobras

Nearest Resistance: $16
Nearest Support: $14
Catalyst: Brazil Election Outlook

Shares of Petrobras (PBR) , Brazil's national oil and gas giant, are down more than 5% this afternoon following news that incumbent Dilma Rousseff was 5 points ahead of more business friendly candidate Marina Silva in the country's runoff election. Brazilian equities are broadly down on the results today, but big ownership in PBR makes it the poster-child for the drop.

Technically speaking, today's selling in Petrobras is ugly. Shares had been bouncing along trend line support since the beginning of April, but today's election update is testing a breakdown through that intermediate-term price floor today. If a close below support confirms a violation of that level this afternoon, then today's 5% drop in PBR could just be the beginning. $16 is the make-or-break price level to watch here.

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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