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TheStreet Open House

5 Big Trades for a Market Top

Tesoro Petroleum

Last up is Tesoro Petroleum (TSO), a petroleum refiner that hasn't enjoyed the strength of its peers in recent weeks. In fact, this stock looks downright bearish right now, thanks to a textbook topping signal in shares. Here's how to trade it.

>>5 Commodity Stocks to Trade for Gains

TSO is forming a head and shoulders top, a bearish reversal pattern that indicates exhaustion among buyers. The head and shoulders is formed by two swing highs that top out around the same level (the shoulders), separated by a bigger peak called the head; the sell signal comes on the breakdown below the pattern's "neckline" level, which was right at $50. The breakdown happened earlier this month.

But traders are getting a second chance for a low-risk entry in a TSO short. That's because this stock pulled back to retest newfound resistance at the neckline. Indeed, there's still plenty of downside room left in this name right now. This is a long-term setup with long-term trading implications.

To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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Follow Stockpickr on Twitter and become a fan on Facebook.

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

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

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