How to Trade the Market's Most Active Stocks

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.

Frontier Communications

Nearest Resistance: $6.50
Nearest Support: $5.70
Catalyst: Q1 Earnings

Things aren't looking to good for Frontier Communications  (FTR) this afternoon. Shares of the $6 billion telco are down more than 8% following Frontier's first-quarter earnings numbers. The firm earned 2 cents per share for the quarter, a profit number that was about half of what Wall Street was expecting the firm to generate, on average. Likewise, revenues came in slightly below analysts' $1.39 billion estimates.

Frontier has been in a pretty well-defined downtrend since February, with shares bouncing their way down their channel. But the floor of that channel is getting violated with today's big-volume selloff. FTR is exposed to a lot more downside risk at this point.

Twitter

Nearest Resistance: $50
Nearest Support: $36
Catalyst: Technical Setup

Social media stock Twitter  (TWTR) is seeing a big-volume drop this afternoon, swatted lower on the heels of a technical setup. A week ago, Twitter was selling off thanks to its first-quarter earnings call, with $36 support looking like the next likely support level for shares to find a bid again.

Sure enough, TWTR has been working its way down to test $36 ever since. A bounce off of that $36 price floor might be a decent buying opportunity for investors looking to build a position in this stock, but longs should keep a tight stop loss right underneath that level.

Synageva Biopharma

Nearest Resistance: $220
Nearest Support: $200
Catalyst: Acquisition News

On a percentage basis, Synageva Biopharma  (GEVA) is the big winner today. Shares are up more than 115% this afternoon, boosted by news that the firm is being acquired by rare-disease company Alexion Pharmaceuticals  (ALXN) in a cash and stock deal valued at $216 as of this writing.

The overnight double in GEVA absolutely stomps the 23% average premium being paid out for acquisition targets in the second quarter of 2015, but the money has obviously already been made on this stock.

Alexion Pharmaceuticals

Nearest Resistance: $170
Nearest Support: $150
Catalyst: GEVA Acquisition

The other side of the Synageva Biopharma acquisition is suitor Alexion Pharmaceuticals  (ALXN). Alexion is selling off about 9% this afternoon as a result of the deal, as shareholders worry that the huge premium ALXN is paying for GEVA is a mistake.

While shares of ALXN had been slowly working their way higher in an uptrend long-term, today's big drop means that the bottom of that trend has been violated. There's more downside risk in ALXN in the near-term, as shares try to find some semblance of support again to curb the selling. $150 looks like the nearest level on the chart where shares could bounce.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned. Follow Jonas on Twitter @JonasElmerraji.

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