5 Stocks Setting Up to Break Out

WINDERMERE, Fla. (Stockpickr) -- U.S. stocks are trending noticeably lower today as fears grow among investors over Italy's long-term debt auction set for Thursday.

It appears that traders are taking some risk off the table ahead of the Italian auction as the euro prints new 11-month lows. Weak demand for Italian debt on Thursday could stoke more sovereign debt fears, so traders are selling equities first and asking questions later.

At last check, the Dow Jones Industrial Average had shed 131 points, and the S&P 500 was off by around 14 points. The tech-heavy Nasdaq was trending lower by 30 points.

>>7 Hot Stocks on Traders' Radars

Despite the overall weakness in the market today, a number of stocks are showing relative strength and either trending significantly higher or setting up for key technical breakouts. Often when a stock triggers a major breakout, it will trend higher despite any overall market weakness.

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.

2012 Stock Predictions and Outlook

Your one-stop shop for 2012 stock recommendations and market predictions.

Here's a look at several stocks that are setting up to break out and trade higher from current levels.

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