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TheStreet Open House

5 Stocks Setting Up to Break Out

Apple

One stock that's starting to trigger a major breakout trade today is Apple (AAPL). This company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. This stock is off to a hot start in 2012, with shares up over 12%.

If you take a look at the chart for Apple, you'll notice that this stock gapped up big after reporting monster earnings last week, from around $420 to just over $454 a share. After gapping up, shares of Apple pulled back a bit but managed to hold right around the gap day's low and find some buying support. Now the stock has started to breakout above its gap day's high, which is bullish price action.

Market players should now watch for AAPL to sustain a high-volume move or close above $454.50 and $460 a share (after hours high following earnings) on heavy volume. A high-volume move or close above those levels will trigger a major breakout for AAPL since it will push this stock into all-time-high territory. This will mean that anyone who has ever bought the stock is making money, and it will mean that anyone who is short is losing money. Look for volume that's near or well above its three-month average action of 12.7 million shares.

You could be a buyer of APPL off any weakness and simply anticipate the move over $460 a share. I am looking for a quick pop in AAPL here, so I would use a tight mental stop at around $450 a share, or just below the gap up day's low price of $443.37. With end of the month markup here, AAPL has a good chance of ripping 20 points or higher if the $460 breakout level is taken out.

Apple, which shows up on recent lists of 10 STocks of Top-Performing Funds in 2012 and 17 Companies on a Roll, was also featured in " 7 Hot Stocks on Traders' Radars."

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