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A Slew of Breakdowns and Breakouts

Here are three candidates for each category, and how to trade them.
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The most fruitful of my weekend scans were those that looked for stocks in tight trading ranges with good risk-reward ratios. They revealed a number of potential short-term breakout or breakdown candidates, and today I'll look at three in each category.

Michael Kors (KORS) -- Daily

Source: StockCharts.com

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Shares of Michael Kors (KORS) have been trading in a range for the last month, and the price action could be forming be a head-and-shoulders top. During this period, the moving-average convergence-divergence (MACD) line has been in bearish divergence to price, and Chaikin money flow has reflected distribution. The pattern neckline is being reinforced by the 50-day moving average, and if this important level of support is breached, the stock could move considerably lower.

Williams-Sonoma (WSM) -- Daily

Source: StockCharts.com

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The stock price of Williams-Sonoma (WSM) broke below its 50-day average in August and attempted a retest earlier this month. The $55 level has provided temporary support, but it is giving way in Monday's session. The next level of support is at the intersection of the June low and the 200-day moving average, and below that downside target is the March gap.

Trinity (TRN) -- Daily

Source: StockCharts.com

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Shares of Trinity Industries (TRN), a railroad-services provider, have also broken below their September range consolidation support level. The technical momentum indicators have rolled over, and the money flow index, a volume-weighted relative-strength measure, is crossing below its centerline.

These three stocks are short sale candidates should they close in lower candle ranges below their respective support levels. Position sizes should allow for stops in the mid-range of their channels.

Fossil (FOSL) -- Daily

Source: StockCharts.com

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Separately, a triangle consolidation pattern has formed on the chart of Fossil Group (FOSL), with the rising 50-day moving average providing support. The stock has been attempting to break and hold above pattern resistance for the last several sessions. During this process, the price momentum and money flow indicators have remained above their centerlines.

FMC Tech (FTI) -- Daily

Source: StockCharts.com

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A triangle pattern has also formed on the chart of the chemical company FMC Technologies (FTI), and the stock looks poised to break above the two-month downtrend line.

Sina (SINA) -- Daily

Source: StockCharts.com

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Shares of China-based Internet-services provider Sina (SINA) have broken above horizontal channel resistance. MACD has made a bullish crossover, and Chaikin money flow is turning positive.

Long entries in these last three bullish setups would require a daily close in upper candle range above the respective resistance levels, and position size should accommodate stops placed mid-range in their patterns.

At the time of publication, Moreno had no positions in the stocks mentioned.