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.

Facebook


Nearest Resistance: $86
Nearest Support: $77
Catalyst: Technical Setup

Facebook  (FB) is in bounce mode to start this week. Shares have been working their way higher in an uptrending channel for the better part of the last year now, catching a bid on every successive test of trend line support.

As FB bounces off of that same support line for a fifth time now, it makes sense to buy the bounce. The 200-day moving average looks like a logical place for traders to park a protective stop.

Xerox


Nearest Resistance: $12.75
Nearest Support: N/A
Catalyst: Analyst Downgrade

Document solutions stock Xerox  (XRX) is adding onto its 2015 losses this afternoon thanks in large part to an analyst downgrade that was announced on Friday. Xerox got cut from neutral to underperform by Tigress Financial, a ratings change that adds insult to injury at XRX.

Shares broke down through a significant price floor after earnings hit on April 24, and they're sinking to new relative lows in this afternoon's session. XRX looks best avoided by longs here.

Genworth Financial


Nearest Resistance: $9
Nearest Support: $8
Catalyst: Australian Unit Sale

Shares of Genworth Financial  (GNW) are getting a little bump this afternoon, following news that the firm is freeing up some capital by selling 14% of its Australian mortgage-guaranty unit. GNW expects to raise approximately $225 million from the sale of the stake.

Technically speaking, GNW looks "bottomy" right now, forming a long-term ascending triangle bottom with resistance at $9. A breakout above that $9 price ceiling is the signal to watch for that this stock is ready to resume a new uptrend.

Zulily

Nearest Resistance: $20
Nearest Support: $12.50
Catalyst: BABA Stake

Small-cap online retailer Zulily  (ZU) is up almost 11% this afternoon, boosted by news that Chinese e-commerce giant Alibaba Group  (BABA) had increased its stake in the much smaller clothing and home decor stock. According to filings, Alibaba's most recent buying operation puts its Zulily stake at 11.5 million shares, or just over 17% of Zulily's total market capitalization. That's a big conviction bet from a major online store.

ZU has been trending lower for the last year or so, cutting its market value in half over the trailing 12 months now. The good news is that this latest BABA stake update has broken shares out above their downtrend. That latest move clears the way for a rebound in shares of Zulily in the second quarter. Traders who buy here should keep a tight stop in place.

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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