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TheStreet Open House

5 Stocks Setting Up to Break Out

Qihoo 360 Technology

Another stock that market players should put on their breakout radar is Qihoo 360 Technology (QIHU), which is engaged in the operations of Internet services and sales of third party anti-virus software in the People's Republic of China. It provides Internet and mobile security products in China. This stock is off to a weak start so far this year with shares off by around 27%.

On Thursday, this company posted a solid earnings beat of 11 cents per share for the second-quarter versus Wall Street estimates of 6 cents per share. Revenue came in at $35.1 million versus estimates of $29.12 million. (I also featured Qihoo this week in " 5 Heavily Shorted Stocks That Could Pop on Earnings.")

If you take a look at the chart for Qihoo 360 Technology, you'll see that this stock is quickly approaching a big breakout if it can manage to trade and close above $25.75 a share. Earlier today, the stock did touch $26.08, but it has since then pulled back to just under $25 a share. What traders should watch for now, is for Qihoo to close above $25.75 on big volume. Look for volume that's close to or well above its three-month average action of 918,000 shares.

I would only buy this stock for a breakout play if you see it clear $25.75 intraday on big volume, or if you see it close above $25.75 with solid volume. If we see either of those two scenarios, I would buy the stock and look for a run towards $30 a share, or possibly even higher. This previous resistance level at $25.75 has acted as a brick wall for this stock for the past three months. That's why a move and close above it should spark a big upside move for Qihoo.

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