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5 Stocks Setting Up to Break Out


Another stock that's rapidly approaching a major breakout is MasterCard (MA - Get Report), a global payments company that provides an economic link among financial institutions, businesses, merchants, cardholders and governments worldwide, enabling them to use electronic forms of payment instead of cash and checks. This stock is off to a slow start in 2012, with shares off by around 5%.

If you look at the chart for MasterCard, you'll notice that this stock recently broke below its 50-day moving average and traded down to a low of $336.26 a share. After hitting that low, the stock found some buying support and it has now trended higher towards its current price of around $354 a share. That rebound off the $336 area now puts MasterCard within range of trigging a major breakout.

Traders should keep an eye on MA for a breakout trade if this stock can manage to move above some near-term overhead resistance at $356 and its 50-day moving average of $359.45 a share on high-volume. Watch for volume to track in close to or well above its three-month average action of 1,047,890 shares. A sustained high-volume move or close above those levels should setup MA to trade back towards its December high of $381.16 a share, or possibly much higher.

If you're bullish on MA, then I would look to be a buyer once it clears $356 and $359.45 a share with solid volume. If we get that action, I would simply use a mental stop that's a few percentage points below $356 in case this breakout fails. Any close on high-volume above the 50-day at $359.45 should be considered very bullish for MA in the near-term.

MasterCard, one of the 10 Best-Performing S&P 500 Stocks of 2011, shows up on a list of 21 Stock Picks That Experts Agree On and was featured in " 5 Tech Sector Stocks Funds Love."
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