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.
Ariad Pharmaceuticals ( ARIA) is giving back a bit this afternoon, as traders take gains following Friday's rumorsthat Baxalta ( BXLT) is in talks to acquire the smaller firm in a bid to boost its cancer therapy exposure. A survey of analysts puts the deal's likely range between $10 and $12, leaving a lot of upside room on the table provided that the acquisition pans out.
- Nearest Resistance: $9.75¿
- Nearest Support: $9¿
- Catalyst: Takeover Talks
The Medicines Company
The Medicines Company ( MDCO) is in breakout mode this afternoon, boosted following news that the firm's cholesterol drug, ALN-PCSsc, showed promising phase I results. The possibility that the new drug will have better dosing characteristics than the current incumbents makes the drug a potential acquisition candidate for the firm and its partner Alnylam Pharmaceuticals ( ALNY) . The Medicines Company is trading at a new 52-week high following the trial results.
- Nearest Resistance: N/A¿
- Nearest Support: $36¿
- Catalyst: Drug Results
Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses.
For traders who aren't risk-averse, there's still time to build a position in Medecines now, just keep a tight protective stop in place.
Last up on our list of Wall Street's most active stocks is SeaDrill (SDRL - Get Report) . This offshore drilling stock is working its way higher this afternoon after starting the session down considerably on news that the firm had taken a 22% fee cut on a renegotiated contract with Mexican national oil company Pemex.
- Nearest Resistance: $9¿
- Nearest Support: $6.50¿
- Catalyst: Crude Oil Decline, Contract Negotiations
Shares of SeaDrill have been selling off for most of the year, as lower crude oil prices have impacted its ability to win the sort of lucrative drilling contracts it enjoyed back when oil prices were in the triple digits. And despite the recent pop in crude prices last week, the downtrend in SeaDrill is still very much intact.
It's a good idea to avoid bargain hunting in this big driller until that technical trajectory changes. $9 resistance is the next line in the sand that needs to get taken out to the top side from here.