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: $6.99¿
Nearest Support: $6.50¿
Catalyst: Phase 3 Results
Small-cap biopharmaceutical stock Synergy Pharmaceuticals (SGYP) is up more than 43% this afternoon, boosted by positive phase III data on its gastrointestinal drug plecanatide showed better than expected results. Now investors are banking on the drug attracting a potential acquisition offer -- and management has indicated that they're open to "all options" that maximize shareholder value.
Technically speaking, this afternoon's high-volume breakout to new highs bodes well for Synergy Pharma, indicating that buyers are clearly in control of shares. That said, whether or not the firm attracts an acquisition offer is more of a lottery ticket at this point than a high-probability trade.
For speculators who aren't risk-averse, now could be a good time to grab onto the bullish momentum, just be aware of the event risk if a suitor doesn't step up soon.
Nearest Resistance: $75
Nearest Support: $74
Meanwhile, another small-cap biopharma is showing traders big gains this afternoon following acquisition news of its own. Kythera Biopharmaceuticals (KYTH) is up more than 22% this afternoon, following news that big pharma stock Allergan (AGN) was buying the firm for $75 per share in cash and stock. The announcement makes this $2.1 billion deal Allergan's third purchase of 2015.
According to Jim Cramer, the Allergan deal is "brilliant."
While today's big gap higher in Kythera is obviously a good thing for investors, the tiny 1% M&A premium left in shares as I write means that the money has already been made here.
Qihoo 360 Technology
Nearest Resistance: $75
Nearest Support: $65
Catalyst: Acquisition Offer
Chinese internet company Qihoo 360 Technology (QIHU) is up almost 8% this afternoon, following news that a group of investors was offering $77 per share in cash to buy the company. Qihoo CEO Hongyi Zhou was a part of the group proposing the takeover.
Wall Street is clearly skeptical about the deal. Despite today's high-volume pop, shares still trade for more than an 8% discount to that $77 offer price.
Long-term, the technicals in Qihoo look solid. After selling off for the last year and change, this Beijing-based tech company is breaking out of a long-term inverse head and shoulders pattern. That setup, plus the remaining merger premium make Qihoo an interesting buy for traders who aren't afraid of volatility.
Advanced Micro Devices
Nearest Resistance: $3.20
Nearest Support: $2.20
Catalyst: New Products
Chipmaker Advanced Micro Devices (AMD) is up more than 5% this afternoon, boosted by three new next-gen, high-end graphics cards revealed at the E3 Expo in Los Angeles.
The new products may be the catalyst, but they're only part of the reason for the big-high volume move. Shares of AMD have been absolutely shellacked over the course of the last year, tumbling more than 44% along the way, and today's move finally triggers a very near-term bottoming setup for this oversold stock.
That doesn't necessarily make AMD a buy for the longer-term. Shares are still stuck in a wide sideways range between $2.20 support and $3.20 resistance, and it's plausible that this stock could be stay in that range long-term. A breakout above $3.20 is a signal that buyers have finally regained long-term control of AMD's price momentum.
Nearest Resistance: $8.60
Nearest Support: $8
Catalyst: Technical Setup
Department store retailer J.C. Penney (JCP) is up 1.7% on big volume this afternoon, but the technicals indicate that it may just be too little, too late.
Penney had been in an uptrend for most of 2015, rallying more than 27% since the calendar flipped to January. But that uptrend is being threatened this week, as shares test a close below critical support.
Put simply, if shares make a lower low with a violation of $8, then it's time for shareholders to think about taking some gains off the table.