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.
Nearest Resistance: $36
Nearest Support: N/A
Catalyst: CEO Transition Carryover
Social networking stock Twitter (TWTR) is down 2.7% as I write this afternoon, another big-volume day that's carrying over from last week's big management shakeup.
Technically speaking, the drop in Twitter today is a very bad thing. Shares are violating long-term support at $36, a move that opens up a lot more downside risk in the near-term this summer. If you're looking for a place to build a position in Twitter, it's wise to wait until this stock can catch a bid again.
Nearest Resistance: $63.25
Nearest Support: $62.95
Small-cap automotive software company DealerTrack Technologies (TRAK) is up big today, rallying more than 57% on acquisition news. Cox Automotive, the owner of Web properties such as AutoTrader and Kelley Blue Book, announced that it's acquiring DealerTrack in an all-cash deal that will hand over $63.25 per share for the smaller software firm.
The acquisition comes at a hefty premium over DealerTrack's price tag last week, but the money has already been made here at this point. Very little premium is left in shares as of this afternoon.
Nearest Resistance: $9
Nearest Support: $8.30
Catalyst: Block Trade
Drugstore chain Rite Aid (RAD) is another stock that's seeing big volume this afternoon. For Rite Aid, the driver was an abnormally large block trade for one million shares at $8.75 that hit the tape at 10 a.m. this morning.
The price action actually looks stellar in Rite Aid right now, with shares forming a pretty textbook ascending triangle pattern. The buy signal comes on a move through $9 resistance. Put simply, if buyers can propel this stock above $9, we've got a fresh buy signal in this drugstore.
Nearest Resistance: $9.20
Nearest Support: $8.60
Catalyst: Merger News
Finally, homebuilder Standard Pacific (SPF) is seeing a big volume session today following news that the firm will merge with Ryland Group (RYL) in a deal that would create the fourth-largest homebuilder in the country. The merger of equals would make 5.0957 shares of Standard Pacific equivalent to one share of higher-priced Ryland.
Both companies are rallying on the merger announcement, and both charts are coming up to test prior highs made in early April. For Standard Pacific, a breakout above $9.20 resistance is a big buy signal.