The S&P 500 is pulling off the upper trendline of a long-term channel, indicating a short-term reversal may be underway. Despite the overall uptrend in the S&P 500, having a handful of stocks which are potential shorting candidates can pay off at times like these. Stocks that are already weak and breaking through support offer the best short trade candidates. This is because they were already dropping as the broader market was moving higher, so a pullback in the S&P 500 will add to the reasons for buyers selling the stock. Even if the S&P 500 doesn’t continue to decline right away, the short trades are likely to still be viable. (For more, see: Range-bound Traders, Breakout Traders, Channel Traders .)

Ciena Corp. (CIEN ) has been falling since October 2013, and on Sept. 22 broke below support at $18 on higher than average volume. Based on the price range since May, the target for the downside breakout is $14.15. Place a stop-loss above $19.95, or to keep risk a big tighter, use $19.50. An option is to hold off on the entry, and wait for a pullback (if it occurs) to the prior support area of $18 to $18.60. Initiate the short trade in that region to reduce risk and increase the profit potential of the trade. (For related reading, see: These Stocks are Close to Triangle Breakouts .)

Cliffs Natural Resources Inc. (CLF ) continues to decline. The stock closed at $12.65 on Sept. 23, after plunging below support at $13.60 on Sept. 22. In 2011 the stock was trading in the $100 region. A stop above $15.40 is the safest location, but above $14.50 should suffice. A target, based on Fibonacci extension levels is at $10.75. The $12.65 Sept. 23 is already well below the $13.60 support area, therefore traders will be waiting for a pullback to the $13.60 to $14 region to get short again. This provides a more attractive risk/reward ratio, but may mean missing a short trade if the price continues to fall from here. (For more, see: Finding Short Candidates with Technical Analysis .)

Cirrus Logic, Inc. (CRUS ) rallied through much of early 2014, but stalled out in July. The price was channeling above $22, but broke below on Sept. 22, completing a small head and shoulders topping pattern. The size of the head and shoulders pattern (subtracted from the breakout price) provides a target of $19. Place a stop loss above $23.55. Risk/reward on the trade is decent but not ideal. An entry price at $22 or above provides a potential reward that is two times as large as the risk. (For more, see: 4 Stocks, 4 Topping Patterns .)

GasLog Ltd. (GLOG ) is one to keep on the radar. The price is hovering above support, a breach of which would complete a large head and shoulders topping pattern. If the head and shoulders pattern completes it provides a target of $14, which would erase all of the gains seen so far in 2014. A drop below $23.11 is the traditional short entry point for this type of pattern, with a stop above the recent swing high of $26.18. With the choppy trading over the last couple months, jumping into the short position before the pattern completes isn’t recommended. (For more, see: When to Short a Stock and Short-Selling Strategies .)

The Bottom Line

Even during a bull market there are pullbacks and corrections. When those pullbacks appear to be starting, look for weak stocks that are likely to see further weakness if general, broader market conditions deteriorate. These stocks have already shown weakness, so even if the S&P 500 doesn’t decline, these short trades could still be viable; they have already shown they can fall as the S&P 500 rises. There are no sure things in trading, though. Use stop loss orders to limit risk and only risk a small percentage of your trading account on any positions you may take. (For more, see: Shorting Stocks at Resistance and The Basics of Short Selling .)

Cory Mitchell doesn’t have interests in any of the stocks mentioned in this article.