One under-$10 name in the semiconductor space that's quickly approaching a major breakout trade is Netlist (NLST - Get Report). This company designs, manufactures and sells memory subsystems for datacenter server and high-performance computing and communications markets. This stock is off to a monster start in 2012 with shares up around 40%.
If you take a look at the chart for Netlist, you'll see that this stock has been uptrending ridiculously strong since it hit its October low of $1.04 a share. Since hitting that low, the stock has been marching higher and making mostly higher lows and higher highs, which is bullish price action. Now shares of NLST are gearing up to trigger a big breakout trade if the stock can manage to clear some near-term overhead resistance levels.Market players should keep an eye on NLST for a breakout trade to trigger above some near-term overhead resistance at $3.85 to $3.96 on heavy volume. Look for a sustained high-volume move and close above those levels to signal that this stock wants to trend significantly higher. Watch for volume that's near or well above its three-month average action of 854,444 shares. If we get that action soon, then look for NLST to make a run at its next significant overhead resistance levels near $5 to $6 a share. One could be a buyer of this stock off any notable weakness and simply anticipate the breakout. I would use a mental stop just below some near-term support at $3.25 a share, or down around $3 a share if you want to give it more room. I would then add to any long positions once $3.85 to $3.96 is taken out with high-volume.