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: $158
Nearest Support: $156
The rumors were true: After popping on Friday on the possibility of a buyout, news is hitting that Salix Pharmaceuticals (SLXP) has agreed to be acquired by Valeant Pharmaceuticals VRX in a deal worth $10.1 billion. The buyout will pay $158 per share in cash to SLXP shareholders.
Salix had been in a parabolic uptrend since shares bottomed this past fall. Now it looks like the money has already been made on SLXP, with shares hovering only slightly below the transaction price.
Home Loan Servicing Solutions
Nearest Resistance: $18.50
Nearest Support: $18.25
Small-cap mortgage servicer Home Loan Servicing Solutions (HLSS) is another name that's moving on acquisition news this morning, after announcing that New Residential Investment (NRZ) was buying the firm for $18.25 per share in cash. HLSS is up almost 10% on the announcement, trading at a slight premium to the deal price.
Again, this is a situation where the money has already been made. HLSS is likely to move back down to $18.25 from here.
Nearest Resistance: N/A
Nearest Support: $175
Catalyst: Salix Acquisition
The other side of the SLXP trade is Valeant Pharmaceuticals (VRX) , the $65.7 billion suitor that's acquiring the smaller pharma firm. Valeant has been trending higher lately, but investors are getting excited that VRX is getting a deal done, and that buying pressure shoved shares above their uptrend this morning. VRX is hitting new highs today, up 13% on big volume.
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. For traders who aren't risk-averse, there's still time to build a position in VRX now, just keep a stop on the other side of $175 support.
For another take on Valeant, Jim Cramer thinks it is undervalued.
Nearest Resistance: $11
Nearest Support: $7.50
Catalyst: Portfolio Sale
Mortgage company Ocwen Financial (OCN - Get Report) is seeing a very interesting trading session today. After starting the day down significantly, OCN has flipped to a 6% gain as of this writing. That big swing in share prices is being driven by news that Ocwen is selling a servicing portfolio of $9.8 billion in loans to Nationstar Mortgage (NSM) . The sale comes as Ocwen faces major regulatory scrutiny, and moves to cut down its scale to reduce customer service complaints.
From a technical standpoint, it's a little early to cheer OCN's price action. The downtrend is still very much intact here, and shares are going to be subject to significant earnings risk on Wednesday. Caveat emptor.
-- Written by Jonas Elmerraji in Baltimore.