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.
Nearest Resistance: N/A
Nearest Support: $4.75
Catalyst: Drug Acquisition
Small-cap biopharmaceutical firm Array Biopharma (ARRY - Get Report) is rallying more than 37% this afternoon following news that the firm had struck a deal to acquire ecorafenib (also known as LGX818) from Novartis (NVS) in exchange for "de minimis payments." The acquisition pact follows another attractive deal from Novartis announced at the start of December.
Array is breaking out to new highs on the news. Making new highs is significant from an investor psychology standpoint because it means 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. Buying ARRY here is a trade that's best suited to more experienced investors.
Nearest Resistance: $3
Nearest Support: $1.25
Catalyst: Analyst Note
Distressed currency broker FXCM (FXCM) is back in sell mode today, dropping following a note from analysts at Citi that affirmed the sell rating in shares and suggested that 75 cents was a more logical price target for shares. The implications of the Leucadia National (LUK) financing on common shareholders' equity still has a lot of unknowns.
Technically speaking, FXCM is still a lottery ticket trade. While shares are posting a pretty modest 10% drop in today's session, we're likely to see much more volatility in the coming sessions. This is another stock that novice investors should leave alone.
Nearest Resistance: $9
Nearest Support: $7.50
Catalyst: Analyst Downgrade
Avon Products (AVP - Get Report) is getting shellacked today, down more than 10% in this session following a cut from analysts at Wells Fargo. The downgrade moves Avon from an outperform to a market perform at the big bank. Avon rallied hard yesterday following rumors that the firm was in talks for a potential takeover by TPG Capital, but Wells' note opined that the possibility of a takeover actually occurring was slim.
AVP has been stuck in a pretty textbook downtrend since the beginning of the summer, swatted lower on every successive test of trend line resistance. Not coincidentally, yesterday's rally ended right at that price ceiling. Expect more downside in AVP as it works its way down the channel.
United Parcel Service
Nearest Resistance: $108
Nearest Support: $103
Catalyst: 2015 Outlook Adjustment
Package giant United Parcel Service (UPS - Get Report) is getting smashed lower in Friday's trading session. UPS announced that its preliminary numbers underperformed for the fourth quarter of 2015, with earnings per share of $1.25. Analysts were looking for $1.47 per share in profits. While UPS doesn't report its full earnings until the first week of February, shares are selling off to the tune of 10% as investors flee from what they anticipate will be an underwhelming earnings call.
For now, UPS is holding on to support down at $103. While that support level looks strong enough to halt the selling, the price action doesn't look particularly constructive between now and UPS' earnings call.
-- Written by Jonas Elmerraji in Baltimore.