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: $2.50
- Nearest Support: $1.20
- Catalyst: Default Risk
SunEdison (SUNE) is seeing big volume this afternoon, churning as investors grow anxious about the possibility that the firm won't be able to release its 2015 annual report by March 30. If SunEdison fails to file its financials or negotiate with lenders by then, it risks a technical default on at least $1.4 billion in loans, according to Bloomberg. That's not an appealing prospect for a stock that's down 95% in the last 12 months.
From a technical standpoint, SunEdison has been trying to carve out a bottom for a while now, but that bottom is at risk as shares test the lower end of their 1-year range. If shares materially violate support at $1.20, then more downside looks likely. On the flip-side, if shares can catch a bid above $2.50 resistance, then SunEdison becomes a rebound trade. It's prudent to wait for shares to cross one of those lines in the sand before trying to trade it. Support is getting tested in today's session.
- Nearest Resistance: $65
- Nearest Support: $58.50
- Catalyst: Earnings Carryover
Nike (NKE - Get Report) is seeing another big-volume day this afternoon, following yesterday's reaction to the firm's third-quarter earnings call. Nike beat numbers slightly for the quarter, generating a profit of 55 cents per share, vs. an average estimate of 48.6 cents. Still, the firm's outlook came in short of expectations, spurring a nearly 4% drop Wednesday that's being followed up by a 1% decline on big volume in today's session.
Technically speaking, Nike is still in an uptrend, but shares could still have a little way to correct before catching a bid at trendline support again. Nike bulls should aim to click "buy" closer to the bottom of the trend channel.
- Nearest Resistance: $44
- Nearest Support: $40
- Catalyst: Technical Setup
Like other big financial sector stalwarts, Citi has been looking "bottomy" from a technical standpoint since the beginning of the year. The inverse head and shoulders pattern in Citi triggers a buy on a breakout above $44 -- and while shares have been flirting with that level for the past couple of weeks, the breakout hasn't happened yet. If Citi can catch (and hold) a bid above $44, it becomes a buy.
- Nearest Resistance: $35.50
- Nearest Support: $30
- Catalyst: Board Nominees
Yahoo! (YHOO) is retreating 1.6% this afternoon, following news that activist shareholder Starboard Value had nominated nine directors to Yahoo!'s board in an attempt to right the ship and wring more value out of shares.
The price move today is more technical, however. Yahoo! is bouncing lower off of major support at $35.50 for the fourth time now, a price move that signals more downside ahead unless some major headline item excites buyers again. It makes sense to avoid this stock below $35.50.