Even though the market looks ostensibly bullish right now, the first stock on our radar this week is a bearish setup. Why bother with downside trades right now? Even though the broad market is nearly re-testing its previous highs, it's important not to let market bias play into your trading outlook. If an attractive against-the-grain setup pops up, it's worth taking a look.
That's exactly what's happening with shares of Synopsys (SNPS - Get Report) right now. This $4 billion software firm is forming a nearly textbook head-and-shoulders top right now -- one that's nearly reached its neckline trigger price.
In SNPS, it's critical to wait for a break below the neckline before betting against shares of this stock. More specifically, it'll be important to wait for a close below the neckline before taking a position in this stock -- shares have made more than one move below the line in the form of an intraday whipsaw. If you do take this trade, put a protective stop right around $27 to protect against a fake out.