How to Trade 3 of 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.

Zoetis


Nearest Resistance: $52
Nearest Support: $46
Catalyst: Acquisition Denial

The rumors of the Zoetis  (ZTS) acquisition are largely exaggerated -- or at least that's the story that's hitting the market today. Shares of $25 billion pharmaceutical stock Zoetis are down 9.7% this afternoon on big volume after rallying a similar amount yesterday. While rumors had hit that Valeant Pharmaceuticals  (VRX) was interested in acquiring Zoetis, CNBC is reporting this afternoon that Valeant's CEO only got in touch with the veterinary drug maker as a courtesy to investor Bill Ackman.

Even though Zoetis is giving back yesterday's gains, things could be a whole lot worse. After all, this stock is still in the uptrending channel that's propelled shares about 17% higher in the last 12 months, and it remains buyable on the next dip down at support. While today looks ugly, the uptrend is intact in Zoetis.

Annaly Capital Management


Nearest Resistance: $9.50
Nearest Support: N/A
Catalyst: Dividend

$9 billion mortgage REIT Annaly Capital Management  (NLY) is down this afternoon, after the company went ex-dividend on its 30-cent second quarter payout. Right now, Annaly pays a huge 12.7% dividend yield, but that enormous yield has been a major detractor to this stock's share price. Between risks of a dividend cut and the prospect of rising interest rates, income investors are getting squeamish about holding this stock long-term.

Likewise, the technicals look pretty broken at this point. Shares violated $9.50 support yesterday, and they're confirming the breakdown this afternoon now that Annaly has gone ex-dividend. This stock's yield may be hefty, but its price losses could end up being a lot heftier this year.

California Resources



Nearest Resistance: $7.25
Nearest Support: $6
Catalyst: Short Seller Report

Oil and gas firm California Resources  (CRC) is down more than 6.9% today after a report hit from short seller BlueMountain Capital claiming that shares of the $2.5 billion E&P stock are "worthless."

California Resources has actually been in a downtrend since April, but today's report is accelerating that downside. The fact that shares are only down single-digits this afternoon indicates that shareholders are overall skeptical about the short case in California Resources, but even so, the price trajectory doesn't look very attractive here.

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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