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.
>>Buy These 5 Rocket Stocks to Beat the Market
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.
Lululemon Athletica
Nearest Resistance: $45
Nearest Support: $35
Catalyst: Founder Rumors
Shares of athletic apparel stock Lululemon Athletica (LULU) are up more than 3% this afternoon, buoyed by rumors that founder Chip Wilson has been meeting with bankers at Goldman Sachs (GS) over possible strategic alternatives after a prolonged drop in LULU's share price. Wilson, who serves on the board and is a major shareholder (with 27% of LULU's shares), has been a controversial figure in the past -- but after a 32% tumble in the last 12 months, investors are getting excited about the prospect of a major change.
For now, the price action isn't that compelling. LULU continues to trade below the trend line resistance level that's acted like a price ceiling for the last year. Until that changes, it's best to stay away from the long-side of this stock.
Ericsson
Nearest Resistance: $12.50
Nearest Support: $12
Catalyst: Technical Setup
Handset maker Ericsson (ERIC) is seeing big volume for technical reasons this afternoon, up 1.26% after a big block trade hit shares this morning, bidding shares higher to start the session. The timing is convenient for shareholders right now -- ERIC is testing a key resistance level at $12.50, the top of this stock's ascending triangle pattern. A breakout above that $12.50 price ceiling is the buy signal for shares.
If ERIC can make the breakout happen, then look for $1 of upside potential as shares move up to the "R2" level on the chart above. When it happens, keep a protective stop just below $12.
American Apparel
Nearest Resistance: $0.80
Nearest Support: $0.60
Catalyst: Founder Drama
Small-cap clothing stock American Apparel (APP) is seeing another consecutive day of big volume, the aftermath of a battle between founder Dov Charney and the firm's board. American Apparel has publicly struggled under the weight of a heavy debt load in recent months, and the recent ouster of the firm's controversial chief executive is still causing a stir, particularly if a battle distracts new leadership from running the ship. Shares are down more than 2% this afternoon, following the latest updates, which included news that the firm's largest private shareholder wasn't planning on supporting Charney in a proxy fight.
But bulls may still have the last laugh. Shares of APP have been forming a bullish ascending triangle setup for the last month, bumping up against resistance at $0.80. A breakout above that $0.80 cent price level is the buy signal for shares of American Apparel in June.
Rite Aid
Nearest Resistance: $8.50
Nearest Support: $7
Catalyst: Technical Setup
Last up is drugstore chain Rite Aid (RAD), a name that's been in "buy-the-dips mode" since the beginning of 2014. Now, with shares testing support for a fifth time this year, investors are getting a change to buy another dip on big volume.
Waiting for a bounce is important for two key reasons: It's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring RAD can actually still catch a bid along that line before you put your money on shares.
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 the names 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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