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.
Bank of America
- Nearest Resistance: $18
- Nearest Support: $15
- Catalyst: Technical Setup
Leading off our list of big-volume stocks is banking giant Bank of America (BAC - Get Report) . BofA is pushing just over 1% higher during an active trading session this afternoon, driven by the technical move that shares actually triggered more than a week ago.
After flirting with a breakout through $15 resistance for most of 2016, shares finally broke out above that long-term price ceiling in August. Since then, Bank of America has been shoving its way higher on the way to resistance up at $18.
This stock's momentum story looks attractive right now. If you haven't bought Bank of America yet, there's still plenty of upside room on the way to $18.
- Nearest Resistance: $14
- Nearest Support: $12
- Catalyst: Technical Setup
Ford Motor (F - Get Report) is another big-name company that's pushing higher on huge volume for technical reasons this afternoon. Ford has spent most of 2016 trading in a wide range between support down at $12 and resistance up at $14. Basically, as shares have pinballed in between those two technically important price levels, this stock has been tradable within that wide channel. And with Ford coming up off of the bottom of that range, now looks like a reasonable buying opportunity for shares of this automaker.'
If you decide to be a buyer here, it makes sense to park a protective stop just below that $12 price floor.
- Nearest Resistance: $47
- Nearest Support: $42
- Catalyst: Generic EpiPen
After generating negative publicity over the 400% increase in the price of Mylan's (MYL - Get Report) EpiPen treatment, Mylan is seeing big volume today after management announced that it will sell a generic version of the emergency allergy shot for half the price of the branded version. Shares have experienced a somewhat volatile session today, as investors went from relief over resolving the increased scrutiny to concern over margin dilution from the generic alternative. Shares are effectively flat on big volume this afternoon.
Mylan's price action has been under pressure in 2016. And after bottoming in mid-May, shares violated their intermediate-term uptrend in the middle of this month. That means, despite the attempts to fix the selloff here, shares could still have more downside ahead. Near-term support at $42 looks like a reasonable price floor for shares, but investors should avoid trying to build a position in this pharma firm until shares can start making some higher lows again.
- Nearest Resistance: N/A
- Nearest Support: $4
- Catalyst: Yellen Comments
Mid-cap mortgage insurer Genworth Financial (GNW - Get Report) is rallying hard for another straight session this afternoon, up more than 7% as I write thanks to carry-over from last week's Fed comments from Janet Yellen. Yellen's remarks helped to spur a rally for insurers on Friday, and again today, but another big component of the size of Genworth's move here is technical. Shares broke out above $4 resistance last week, triggering a buy signal that came at the exact same time that this stock was hitting fresh 2016 highs. Shares look likely to keep moving higher in the sessions ahead.
Making new highs is significant from an investor psychology standpoint because it means that everyone who has bought shares in the last 52-weeks 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. This recent up move in momentum actually looks like a decent buying opportunity here.
- Nearest Resistance: $7.25
- Nearest Support: N/A
- Catalyst: Bondholder Lawsuits
Gaming company Caesars Entertainment (CZR - Get Report) is shedding points this afternoon, down more than 16% as of this writing, following a court ruling that the firm must face bondholder lawsuits that could potentially push Caesars into bankruptcy. The lawsuits involve more than $11.4 billion in debt, and stand in the way of pulling the firm's main operating unit, currently in bankruptcy, back into good standing. Bondholders are looking to increase their recoveries beyond the payouts currently being offered by the Caesars unit.
From a technical standpoint, Caesars' chart is broken. While shares had been in a shallow, but well-defined uptrend for most of this year, they violated that uptrend with today's big gap lower. That opens shares up to considerable downside risk, especially with the prospect of dragging out the bankruptcy resolution for investors this fall. Buyer beware.
- Nearest Resistance: $10.50
- Nearest Support: $9
- Catalyst: Sympathy Move
Alcoa (AA - Get Report) is leading its aluminum producer peers to higher ground this afternoon, following news that Chinese buyers Zhongwang will purchase Aleris for $2.33 billion. That acquisition could signal an appetite for aluminum operators in China, particularly once the transaction to split apart Alcoa's operations gets completed. Analysts see Aleris as a potential comp for "new Alcoa," a fact that adds some extra price discovery to the new company.
That said, technically speaking, Alcoa's chart looks a little less compelling. Shares have been forming a descending triangle pattern in the long-term, as this stock bounces between horizontal support at $9 and lower highs. With Alcoa's momentum fading in the long-term, this stock is waving a caution flag to investors. It becomes a sell signal if shares violate their $9 price floor.
From a fundamental perspective, Alcoa is aholding in Jim Cramer's Action Alerts PLUS charitable portfolio. On Friday, Cramer and Research Director Jack Mohr wrote:
Importantly, we like Alcoa's management, believe this value-add play has been discounted by the market as it is lumped in with the commodity-based Alcoa, and we expect a higher valuation for Arconic as a stand-alone entity. We remind members that Alcoa is a true value name, and only suitable for investors with a higher risk tolerance and longer time horizon (i.e., we expect volatility in the near term, given the frequent movements in aluminum prices and arbitrageurs and traders attempting to play the separation).
- Nearest Resistance: $30
- Nearest Support: $27.50
- Catalyst: Unit Sale
Finally, building material maker USG (USG) is up more than 7% this afternoon, boosted by news that the firm is planning on selling building product distributor L&W Supply to ABC Supply in a cash deal for $670 million. L&W is one of USG's more commoditized businesses. While it contributed a third of USG's revenues last year, it made up only 6% of operating income. Meanwhile, the purchase price accounts for 15% of USG's market capitalization.
Technically, USG is teetering on the edge of an important breakout. Shares have been forming a pretty textbook example of an ascending triangle setup for the last several months, signaling a buy on a material move above $30. At this point, the breakout hasn't officially happened yet. Shares are still too close to that $30 price ceiling to actually call the breakout confirmed. That said, there's very good reason to keep a close eye on USG's price action in the week ahead. If shares clear that $30 barrier, this stock opens up a lot of upside potential.