How to Trade the Market's Most-Active Stocks: SDRL, RAD, KGC, JCP

 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.

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.

Without further ado, here's a look at today's stocks.

Rite Aid

Nearest Resistance: $6
Nearest Support: $5
Catalyst: Q2 2015 Earnings

Drugstore chain Rite Aid (RAD) is down 1.85% this afternoon, the second day lower for shares following yesterday's earnings release for the second quarter of fiscal 2015. Rite Aid stomped earnings estimates, bringing in profits of 13 cents for the quarter; analysts were only expecting EPS of 6 cents on average. But the firm posted lower-than-expected full year guidance, and that's what swatted shares down at the open on Thursday.

More significantly, yesterday's selling broke shares below key support at $6, triggering a classic head and shoulders top pattern that's been forming in RAD in the long-term. That means that today's continuation to the downside isn't a huge surprise. If you're looking for a chance to buy RAD, I'd recommend waiting until this stock can catch a bid again; shares have a lot more downside risk left in them.

J.C. Penney

Nearest Resistance: $11
Nearest Support: $10
Catalyst: Technical Setup

Shares of department store retailer J.C. Penney (JCP) are selling off more than 5% this afternoon, swatted lower as momentum stocks show their cracks. And a momentum stock is exactly what Penney has been in recent months. Shares are up around 20% since July, outperforming the broad market by a big margin.

The breakout above $10 last month was significant from a technical standpoint. Now, that round-number price tag is likely to act as support in September. If shares manage to bounce off of support at $10, consider it a low-risk buying opportunity for shares of JCP.


Nearest Resistance: $31
Nearest Support: N/A
Catalyst: Technical Setup

Seadrill (SDRL) is getting attention today following news that major investor Tor Olav Toeim had withdrawn his nomination for the firm's board. Instead, Troeim will be focusing his attention on Golar LNG.

Or at least that's the story that's getting attention today. In fact, Seadrill's nasty 6% drop today is for technical reasons. Shares of SDRL fell through key support at $31 last week, violating a price floor that's been in place since the beginning of March. So, after pulling back to reaffirm newfound resistance at $31, SDRL is in breakdown mode.

Avoid the temptation to score a bargain in this 14% yielder. It's best to avoid SDRL here.

Kinross Gold

Nearest Resistance: $3.65
Nearest Support: N/A
Catalyst: Gold Drop

Last up is Kinross Gold (KGC) , a name that's down more than 3.4% this afternoon on big volume thanks to a drop in spot gold prices. Here again, the technical are playing an important role in a commodity-driven stock. Kinross closed below key support at $3.65 in yesterday's session, clearing the way for considerably lower ground in September.

Gold miners such as Kinross are effectively a leveraged bet on gold prices, so it's not surprising that KGC is correcting hard today. What is surprising is how much worse Kinross' chart looks relative to the precious metal itself. KGC another name to avoid until it can catch a bid again.

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 Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji

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