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.
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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 today.
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These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. And when there's a big catalyst, there's often a trading opportunity.
Without further ado, here's a look at today's stocks.
Allergan
Nearest Resistance: N/A
Nearest Support: $132
Catalyst: Acquisition News
Shares of Allergan (AGN) are up more than 16% this afternoon, following news that the firm is getting acquired by Valeant Pharmaceuticals (VRX) in a cash and stock deal worth $157.90 per share as I write. That means that AGN is currently trading at nearly a 4% premium after the news, an indication that investors are pricing in the potential for competing bids on Allergan.
Allergan broke out through an intermediate resistance level at $132 last week, an indication that buying pressure was mounting in shares. Investors who bought that breakout have fared well -- but with an acquisition offer in place, the money has been made on AGN at this point.
Valeant Pharmaceuticals
Nearest Resistance: $145
Nearest Support: $125
Catalyst: Allergan Acquisition
The other side of the Allergan acquisition is Valeant Pharmaceuticals (VRX), a name that's seeing its own share of buying this afternoon on the heels of its $50 billion buyout offer. Valeant is up 4% on huge volume this afternoon, a good indication that investors approve the value creation of the combined firm. If you're looking for a trading opportunity off of this big M&A deal, VRX is the name to trade right now.
This stock has been in a well-formed downtrend since late February, but VRX broke out of the channel on today's news. That change in trend is a big buying opportunity in shares right now. While the event risk of potential rival bids for AGN does add a little uncertainty to the situation, the price action in VRX looks very constructive from here.
To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to
TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.Follow Jonas on Twitter @JonasElmerraji
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