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: $12.75
- Nearest Support: N/A
- Catalyst: First Niagara Acquisition
Ohio-based regional banking stock KeyCorp (KEY) is down more than 6% on huge volume this afternoon, the after-effects of the announcement that the firm had agreed to buy First Niagara Financial Group (FNFG) in a cash and stock deal worth $4.1 billion. That decline pushes KeyCorp's 2015 performance to negative 10% -- but the technicals suggest that shares could end even lower by the time the calendar rolls over.
KeyCorp's selloff today means that shares are violating the $12.75 level that's acted as support as shares churned sideways from the middle of August through yesterday's close. That violation of a major price floor for shares of KeyCorp opens the door to more downside from here. Caveat emptor.
New York Community Bancorp
- Nearest Resistance: $19
- Nearest Support: $16.40
- Catalyst: Astoria Acquisition
Another large regional bank is attracting some huge trading volume this afternoon: New York Community Bancorp (NYCB) . NYCB announced yesterday that it had agreed to buy Astoria Financial (AF) in a $2 billion deal that pays Astoria shareholders 50 cents per share in cash plus one share of NYCB for every share they own. That leaves about a 6.5% risk premium on shares of Astoria right now, but shares of KeyCorp have been selling off over the past two sessions because of the deal and a $650 million share offering that will help to pay for it.
Long-term, New York Community Bancorp is forming a double top pattern, a bearish reversal setup that triggers with a breakdown through $16.40 support. Shares are testing that big support level this afternoon. For now, they're managing to hold above that level, but a violation of $16.40 is a major red flag for anyone who owns this stock. Keep a close eye on NYCB here.
- Nearest Resistance: $11.97
- Nearest Support: $11.60
- Catalyst: Acquisition Bid
Semiconductor firm PMC-Sierra (PMCS) is up 2.3% on big volume this afternoon, following news that Skyworks Solutions (SWKS) had upped its bid for PMC-Sierra to $11.60 in cash, countering a rival bid from Microsemi (MSCC) . The bidding war between the two firms has been enough to spur a small premium to the current bid. While the two offers are close to each other in value, Skyworks' all-cash offer was enough to earn the okay of PMC-Sierra's board.
Technically speaking, the money has already been made on this stock. While the bidding war could continue between PMC-Sierra's two suitors, that's more of a lottery ticket than a high-probability setup at this point. Traders should look elsewhere for opportunities this week.
- Nearest Resistance: $60
- Nearest Support: $54
- Catalyst: Q3 Earnings
Biopharmaceutical firm AbbVie (ABBV) is up 10% this afternoon following third-quarter earnings numbers. Excluding one-time items, the firm reported $1.13 per share in profits for the quarter, beating the $1.08 in earnings that Wall Street was hoping for. Likewise, guidance from AbbVie was strong; the firm sees double-digit growth all the way through 2020, an outlook that's exciting investors here.
Technically, AbbVie looks great right now. Shares had been trending lower in a well-defined downtrend, but today's big earnings breakout is ending that downside pattern. This looks like a major change in trend for AbbVie -- and a good buying opportunity for a year-end rally.