Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generatinginvestment 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.
Square
- Nearest Resistance: $13.80
- Nearest Support: $12.75
- Catalyst: IPO
Payments firm Square (SQ) is seeing a big-volume session in its second day as a publicly traded company. Yesterday's initial public offering went well for Square, following the decision to price the stock lower than its prior expected price range. Since then, shares have been consolidating intraday in between resistance up at $13.80 and support down at $12.75.The trading history is pretty scant just two days in, but the early indications look good for Square's ability to attract buying pressure. A move through $12.75 would signal an attractive buying opportunity for traders.
Abercrombie & Fitch
- Nearest Resistance: $23
- Nearest Support: $19
- Catalyst: Q3 Earnings
Apparel retailer Abercrombie & Fitch (ANF - Get Report) has been a poor performer for most of the last couple of years, but shares could finally be staging a turnaround after the third-quarter results that the firm posted this morning. A&F is up more than 20% as of this writing, boosted by news that revenues topped analyst expectations, and adjusted profits for the third quarter came in at 48 cents per share, more than double the number analysts were expecting.
From a technical standpoint, Abercrombie is starting to look pretty intriguing. Shares have spent much of 2015 forming a pretty classic bullish reversal setup, which triggers on a breakout through $23 resistance, a level that's getting tested today. If A&F can end today's session materially above $23, consider it a big buy signal.
Sarepta Therapeutics
- Nearest Resistance: $42.50
- Nearest Support: $27.50
- Catalyst: Competitor Concerns
Shares of small-cap biopharmaceutical stock Sarepta Therapeutics (SRPT) are seeing a huge-volume 29% rally this afternoon. The reason for the move? Schadenfreude. News that the FDA has big concerns about BioMarin's (BMRN -Get Report) drisapersen drug, a competitor to Sarepta's eteplirsen treatment, could bode well for this much smaller rival. And investors are piling into shares as a result.
Technically speaking, Sarepta's price action looks bullish. Shares are breaking out of a rounding bottom setup this afternoon, clearing the way for a re-test of prior resistance up at $42.50. From a risk management standpoint, it makes sense for buyers to park a protective stop on the other side of the 200-day moving average.
By Jonas Elmerraji
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