5 Stock Trades for a Confusing Market

Michael Kors Holdings

Next up is Michael Kors Holdings (KORS), the $8 billion fashion stock that went public back in December. KORS definitely fits the momentum stock mold, up more than 52% since the first trading day of 2012.

So should traders be counting on another cataclysmic drop in shares of KORS? Maybe.

KORS has been holding long-term support at $40, a price where shares have historically caught a bid easily from the glut of demand that's existed below that price. But with KORS testing that support level for a third time in May, a breakdown below $40 would be a very bearish signal for investors, locking in the double-top pattern that up to this point has merely been a possibility. On a shorter-term timeframe, a doji candle and a bullish engulfing pattern both indicate that KORS may live to fight above $40 for the next few sessions.

Here again though, RSI is adding some confirmation to the downside - it's been in an unbroken downtrend since March. Still, the only signal to go short KORS is a price break below $40. When that happens, I'd recommend putting a protective stop at the 50-day moving average.

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