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.
UTi Worldwide
- Nearest Resistance: $7.10¿
- Nearest Support: $6.95¿
- Catalyst: Acquisition
Shareholders of UTi Worldwide (UTIW - Get Report) are getting some relief from pretty rough price action this year. Shares of the small-cap supply-chain services company are up more than 47% this morning on huge volume, following news that Danish logistics company DSV A/S has agreed to buy the company in a deal worth $7.10 per share.
In spite of the big buyout offer, UTi remains about 40% lower than it started back in January. That suggests that DSV may still be getting a pretty good deal on the smaller freight logistics play. Either way, with the deal announced, the money has already been made on the UTi Worldwide trade – investors are better off finding another opportunity to trade this week.
Alcoa
- Nearest Resistance: $11¿
- Nearest Support: $9.50¿
- Catalyst: Q3 Earnings
Alcoa (AA - Get Report) is correcting this afternoon following the firm's Q3 earnings call. Alcoa generated profits of 7 cents per share for the quarter, falling short of the 12.7-cent profit per share that analysts were expecting. Shares are reacting to the miss by shedding about 5% on big volume this afternoon.
Even though Alcoa is down this afternoon, this big aluminum producer is far from out. Shares are still pointed higher in a newly formed uptrend, following a breakout through the top-side of the downtrend that has harangued shares for most of 2015. A return to trend line support looks like a good buying opportunity for Alcoa bulls in the near-term.
Vale
- Nearest Resistance: $5.50¿
- Nearest Support: $4¿
- Catalyst: Bauxite Mine Sale
Brazilian metals firm Vale (VALE - Get Report) is seeing a 3.8% upside bump this afternoon, boosted by news of an asset sale. The firm received a letter of intent from European aluminum giant Norsk Hydro to acquire its 40% stake in bauxite miner Mineracao Rio do Norte. While the pricing hasn't been made public, the deal comes at the same time that aluminum prices are rallying on reports that producers are cutting output, a development that some analysts see valuing the deal at as much as $1 billion.
It's a little early to bet on big upside in Vale at this point. That's because shares remain constrained by a well-defined downtrend that's been in play since early May. It makes sense to wait for Vale to break out above the top of that channel before jumping in – shares are testing that level this week.
Gap
Nearest Resistance: $28¿
Nearest Support: N/A¿
Catalyst: September Sales
Nearest Support: N/A¿
Catalyst: September Sales
Apparel retailer Gap (GPS - Get Report) is down more than 6% on big volume this afternoon, a reaction to the firm's September comparable sales release after the bell yesterday. Gap reported overall sales down 1%, with its Banana Republic brand down as much as 10% versus the prior year. Likewise, gross margin estimates came in lower than expected due to increased promotional activity for the quarter.
Gap has seen its share sell off more than 35% year-to-date, so today's decline is nothing new. Importantly, though, this afternoon's drop is violating key support at $28, a move to test new 52-week lows. That support violation is likely to come with additional downside in the coming weeks.
By Jonas Elmerraji
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