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.

Alibaba


Nearest Resistance: $90
Nearest Support: $72
Catalyst: New CEO

Chinese e-commerce giant Alibaba  (BABA) is seeing a second-straight day of buying following the announcement that the firm was getting a new CEO. Daniel Zhang takes over the chief executive role at Alibaba on May 10, a move that investors are hoping can fix the downward trajectory in this stock. The pent-up buying power we saw get released this week is evidence that investors like the new direction from management.

But from a technical standpoint, nothing has really changed in Alibaba at this point. This big stock has been in a downtrend since last fall, and the downtrend is still very much intact in today's session. In fact, shares are pressing up against the top of the channel this week.

If history is any indication, a correction could be in order in BABA. Longs should wait for shares to definitively take out the top of the channel before buying Alibaba.

MannKind

Nearest Resistance: $4.50
Nearest Support: N/A
Catalyst: Q1 Earnings Numbers

$1.6 billion biopharmaceutical stock MannKind  (MNKD) reported its first-quarter numbers after the bell yesterday, losing 8 cents per share on no revenues. While the result was more or less expected, it comes at a time when sentiment is already pretty squarely pointed against this drug stock.

Frankly, charts don't get much uglier than MNKD's. This stock violated an important support level at $4.50, and it's been tracking lower ever since. Until shares can find some semblance of support, buyers should avoid it.

Gevo


Nearest Resistance: $7
Nearest Support: $5
Catalyst: Airline Order

Renewable chemical and biofuels firm Gevo  (GEVO) is seeing a second session of big-volume gains this afternoon, following this week's news that the firm had signed a deal with Alaska Air Group  (ALK) for renewable jet fuel. If completed, the deal would make Alaska the firm commercial air carrier to fly on biofuel. That will have to wait for GEVO to achieve international certification for its jet fuel program, expected to happen later this year.

GEVO has been in a pretty nasty downtrend on a long-term basis, but shares broke out above the top of the trend yesterday on the news. Even though this stock has run pretty dramatically lately, now looks like a good time for traders who aren't risk-averse to build a starter position in this stock.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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