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.
iPath S&P 500 VIX Short-term Futures ETN
- Nearest Resistance: $17
- Nearest Support: $15
- Catalyst: Market Volatility
The iPath S&P 500 VIX Short-term Futures ETN (VXX) is seeing a big-volume day to kick off the week. This $1.5 billion exchange-traded note is one of the highest-volume issues on the NYSE this afternoon thanks to declining volatility levels in the broad market. Volatility, and the VXX by extension, has been in a prolonged decline since the broad market bottomed in February, and that trend isn't showing any signs of reversing course.
It's important to note that conventional technical indicators don't generally apply with the VXX. This ETN is priced off of a statistical equation, not supply and demand for shares. That said, as the S&P 500 continues to make moves toward prior highs in 2016, its inverse relationship with the VIX Volatility Index is likely to continue to push VXX to lower levels in May.
- Nearest Resistance: $4
- Nearest Support: $3.50
- Catalyst: Technical Setup
Shares of mortgage insurance company Genworth Financial (GNW - Get Report) are rallying on a technical move this afternoon, up more than 17% as I write on the heels of last week's earnings call. Investors liked Genworth's results -- and its plans to separate its life and annuity business from its long-term care business. Shares ended last week testing a key resistance level at $3.50, and today's session is giving traders a clear breakout through that level.
Long-term, Genworth is forming an inverse head and shoulders pattern, a classic technical reversal setup that triggers a buy with a breakout through its neckline level. That was the aforementioned $3.50 level in Genworth. From here, more minor resistance at $4 is the next level for buyers to conquer. Genworth is still a somewhat volatile name, but it looks like this stock is undergoing a major change in trend this spring.
- Nearest Resistance: N/A
- Nearest Support: $40
- Catalyst: Failed Merger
Oilfield service provider Halliburton (HAL - Get Report) is up 2.3% on big volume this afternoon, following news that the firm's long-delayed merger with peer Baker Hughes (BHI) was being called off. Market participants had already priced in a low likelihood of the deal going through, and Halliburton is benefitting from investors' increased comfort over leaving Halliburton as a standalone company. The news of the failed merger is breaking Halliburton out to new highs for 2016.
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 that reason, investors who arent too risk-averse may want to consider buying Halliburton here. Elsewhere, Halliburton made my list of Rocket Stocks for this week.
- Nearest Resistance: $14
- Nearest Support: $11
- Catalyst: Technical Setup
Perennial high-volume mining stock Freeport-McMoRan (FCX - Get Report) is seeing another highly-active trading session this afternoon, down almost 3% for technical reasons. Freeport has been one of the highest-profile beneficiaries of the prolonged rally in commodity prices this year, and today's correction looks small in the context of the rally that shares enjoyed last week.
Long-term, Freeport-McMoRan is working its way higher in a well-defined uptrending channel, catching a bid at every test of support so far. From here, it makes sense to buy the dips in Freeport.
- Nearest Resistance: $15
- Nearest Support: $13
- Catalyst: Technical Setup
Ford Motor (F - Get Report) is another big stock that's seeing big volume for technical reasons this afternoon. Ford has been in an uptrending channel of its own since the calendar flipped to 2016, bouncing its way higher on every test of support along the way.
Right now, Ford is hanging out near the midpoint in its channel, a price level that doesn't really offer a compelling buying opportunity just yet. Ford bulls should wait for shares to move closer to trend line support before pulling the trigger on this automaker.
- Nearest Resistance: $10.30
- Nearest Support: $10.29
- Catalyst: Acquisition
Small-cap tech stock Opower (OPWR) is rallying 30% this afternoon, up big following news that the firm is being acquired by Oracle (ORCL - Get Report) for $10.30 per share in cash. Shares of Opower immediately traded up to $10.30 at the open this morning, taking out any merger premium.
In short, investors are pricing in a near certainty that the Oracle acquisition of Opower goes through, and that means that the money has already been made on the Opower trade.
- Nearest Resistance: $40
- Nearest Support: $25
- Catalyst: 10-K Filing
Shares of beleaguered biotech stock Valeant Pharmaceuticals (VRX) are selling lower on big volume this afternoon, down more than 11% following last week's belated 10-K filing with the SEC. The late filing didn't come with many surprises to analysts, but the lack of a positive catalyst means that shares are still stuck within the long-term downtrend that's bounced shares lower continuously for the last year.
At this point, Valeant is trading sideways in a rectangle pattern, bounded by horizontal resistance up at $40, and horizontal support down at $25. Put simply, the direction that shares break out from that rectangular consolidation range is going to dictate Valeant's next direction. This stock is currently hanging out near the lower end of that consolidation channel this week.