These 4 Stocks Are Potentially Topping Out

Commentary The S&P 500 broke definitively below its 15 month trend channel on Oct. 10. The break below channel support doesn't mean the long-term uptrend is over, but it does indicate the market is in a deeper corrective phase. Because of this, stocks that have stalled out on the upside and are breaking below support are giving the signal to exit long trades. That means that for for those who are so inclined, it could be a good time to get into short positions.

AmerisourceBergen Corp. (ABC) AmerisourceBergen Corp. (ABC) hasn't yet signaled it's time to sell or enter a short positions, but its advance has stalled. From August through October its price has been stuck below $79.13, and with the broader market now in a corrective phase, investors should look to take profits (sell) if ABC drops below $76.25. That drop breaks a short-term rising trendline. The short-term downside target - if the above scenario develops - is $74.25. This is support from a gap higher in July. Next target is $70.25 - the longer-term upward trendline. Don't count this stock out just yet, though; if the price pops back above $78.60 it could kickstart another rally. (For related reading, see: 4 Stocks with Recent Significant Gaps Higher.) SEE: Profiting In Bear And Bull Markets

Shire Plc (SHPG) In September, Shire Plc (SHPG) just barely edged above its former July high and then stalled. This is another stock that hasn't provided a sell or short signal yet, but soon could. Sell on a drop below $247.50, as that will break the short-term range indicating a lower price to come. An initial target is $236, just above where the stock found support on the early August decline. The next target is $230, and if the stock moves below that level, it could correct to support just below $200 (gapped-higher from here). This stock has been in a strong uptrend, so don't count it out; if it rises above $265 another wave higher could be underway. (For more, see: Trading Stocks at Strong Support or Resistance.)

ITC Holdings Corp. (ITC) ITC Holdings Corp. (ITC) has a larger topping in place, as the price has been reaching the same resistance area since April. When the price got above $37.75 it was batted back down quite quickly, and on numerous occasions. This is called a multiple-top, and when the price drops below the retracement lows which occurred between those highs, then a top is considered in place. The retracement low for this pattern occurred in June at $34.26. If ITC's share price drops below that level then a top is in place. Traders sell as well as potentially go short, or at least begin looking for short entry points since the trend has shifted to the downside. The price target - if the price breaks below $34.26 - is $31. This is just above where the price found support back in November and December of 2013. (For more, see: Stocks Poised for a Breakout? Or Multiple Top?)

EMC Corp. (EMC) When EMC Corp. (EMC) broke below $28.75 in late September it completed a small topping that indicated a slide to $27.76. If the price drops below $27.76, look for the stock to test $27 - the site of a gap higher in July. This move would also break the upward trendline that began in February. With the stock having already made a number of lower swing highs and lower swing lows in late September and early October, price rallies into the $29 or $29.65 regions (approximate potential entry points) present short opportunities. (For more, see: These Healthcare Stocks Remain Strong Bets.)