5 Stocks Setting Up to Break Out
China's central bank surprised the market after it reported a jump in loans for March. Market players viewed that news as a positive since many were worried that China's economy was starting to lose some of its feverish growth.
Debt worries in Europe took a day off after Italy had no issues in selling $6.4 billion in government debt. That successful sale helped rates in Italy fall, and European stocks to reverse course and trend higher after opening up in the red.
The Dow Jones Industrial Average finished up 181 points and the S&P 500 added 18 points. The tech-heavy Nasdaq exploded higher by 39 points. All three of these U.S. indices are now trading above or very close to their 50-day moving averages . If they all can continue to trend above their 50-days, we could easily see the market continue to extend its gains from Thursday. That said, any selloff for all three back below their 50-days will put any future rallies into serious jeopardy.
If we do see all three indices trending above their 50-days, then we are going to see a ton of stocks trigger major breakout trades. Trend traders who look for breakouts know that market is always serving up stocks that are ready to move and explode higher.
Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.
With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels .
One stock that's quickly approaching a major breakout is on-demand software and professional service provider Responsys(MKTG) . This stock is off to a monster start in 2012, with shares trading up over 40%.
If you take a look at the chart for Responsys, you'll notice that this stock trended up strong from last November's low of $7.30 to a recent high of $12.78 a share. After hitting that high, the stock plunged to $9.69 but then recovered from that level and closed at $12.71 a share on Thursday. That recent rebounded came on heavy upside volume, and it's now pushing MKTG within range of triggering a major near-term breakout trade. On Thursday, the stock closed up 5.8% on volume that registered over 850,000 shares, which is well above its average volume.