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.

New Residential Investment

Nearest Resistance: $17
Nearest Support: $15.50
Catalyst: Secondary Offering

Residential REIT New Residential Investment  (NRZ) is down 3.6% on big volume this afternoon, following the firm's announcement that it was planning a 31.5 million share secondary offering to raise capital.

While it's not uncommon for stocks to correct on news that investors are getting diluted, New Residential actually started looking bearish late last week, when shares violated the uptrend has been in play since the end of February. With shares following through below that breakdown this week, it looks like New Residential could be changing its trend in a negative way. Caveat emptor.

Cyprus Semiconductor

Nearest Resistance: $14
Nearest Support: $12
Catalyst: Merger Agreement

Mid-cap tech stock Cypress Semiconductor  (CY) is up more than 4.6% this afternoon, boosted by news that acquisition target Integrated Silicon Solution  (ISSI) had agreed to a merger for $20.25 per share in cash.

While the news is a win for Cypress, it's hard to argue with this stock's price trajectory right now. Cypress Semiconductor has been in a downtrend since the first quarter, bouncing lower on every test of the top of its price channel. Prospective longs should avoid clicking "buy" until shares can catch a meaningful big above the top of that channel.

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