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5 Stocks to Trade for Breakout Gains


Social networking site LinkedIn (LNKD - Get Report) is for your professional life what Facebook is for your personal life -- it's a way to may contacts, share industry insights, and maybe even find a new job. Ever since this 90 million-member company went public in mid-2011, there have been plenty of eyes on it, and that's not about to change soon now that Facebook is on the path to IPO.

This isn't the first time I've talked about LinkedIn as a potential trade. Back in June, we took advantage of a breakout above $85. Now, we're seeing a similar upside seutp.

Right now, LinkedIn is testing longstanding resistance at the $92.50 level, a price that's acted like a price ceiling for shares the past several times buyers tried to ratchet prices higher. As a result, there's a big buy signal if shares can sustain a shove above that $92.50 price level.

Resistance levels like the one at $92.50 work because there's a glut of supply of shares above that level. In other words, it's a price where sellers become more willing to sell and take gains than buyers are to buy shares. When that happens, prices reverse back lower.

A breakout above that price, however, tells us that demand is in control in LNKD. That's when it makes sense to be a buyer.

LinkedIn shows up on a list of 4 Tech Stocks for 2012.

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