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TheStreet Open House

5 Stocks Poised to Break Out

Stocks in this article: LLENACTGDNNAMRNCRIS

WINDERMERE, Fla. ( Stockpickr) -- Continued concerns over the fate of the U.S. deficit-reduction talks in Washington have left stocks mixed today on Wall Street. Congress is currently trying to reach a deal over the debt ceiling so the U.S. can avoid an unprecedented default.

Some outside observers had hoped a deal would have been reached by now, and rumors even circulated yesterday that a deal was in place between President Obama and the speaker of the House John Boehner. However, those deal rumors were quickly shot down adding even more uncertainty to the mix.

In midday action the Dow Jones Industrial Average is off by around 30 points at 12,693.49 and the S&P 500 is up just 1 point at 1345.11. The tech-heavy Nasdaq is clearly the strength in the market since its trading up 22 points to 2856.49.

All three of the major market indexes have racked up some solid returns as we approach the inevitable outcome of the debt ceiling. There's an old saying on Wall Street that goes, "buy the rumor, sell the news," and that might come into play here if we get positive outcome, which I think is highly likely. Let's face it the current administration would be committing political suicide if they let the U.S. default on its debt.

Related: 5 Big Stocks to Trade for Gains

That means that U.S. stocks could sell off sharply if Congress can get its act together and reach a deal. A nice selloff would actually be healthy for this market since it would hopefully lead to a reset for many stocks that have been acting strong and trending higher for the past couple of months. It would give the market a chance to work off some overbought conditions.

The top traders in the world know that markets are made up of thousands of stocks and tons of sectors. With so many moving parts, there's always some sector or stock that's starting to break out breaking and move higher. Often times those moves will not be dependent on what the overall market is doing.

Trading breakouts is not a new game on Wall Street. This strategy has been by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. With that in mind, here's a look at a number of stocks that look poised to break out and trade higher from current levels.

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