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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks to Trade for Breakout Gains

Stocks in this article: COH RL GOLD EWP FXE

Coach

First up on our Tweet-driven list is Coach (COH), the handbag and fashion accessory company that's seen its shares rally more than 20% so far this year. Coach is a good example of why technical inputs can be so valuable for investors: this stock has been on a momentum tear for the last few years, and fundamentals aren't worth much when investors are trying to determine when that rally might run out of gas.

A potentially bearish setup in shares of Coach does, though.

Right now, Coach is forming a head and shoulders top, a bearish formation that indicates exhaustion among buyers. Keep in mind that the existence of the pattern doesn't mean that Coach's shares are moving lower just yet -- it has to trigger first. For that short signal, shares need to break down below the neckline at $72.

Even though the head-and-shoulders (and its inverse) is likely the most well known technical pattern, it's still a valuable one: an academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits that would have been both statistically and economically significant."

At this point, it looks like the right shoulder still needs time to form in order to get a clearer picture of what's going on in Coach. That said, if I were a Coach shareholder, I'd be keeping a very close eye on that $72 neckline.

Coach shows up on a recent list of 12 Highest-Rated Consumer Stocks Picked by S&P.

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