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5 Stocks Setting Up to Break Out

Petroleum Development

Another stock that's trading within range of a breakout is Petroleum Development (PTD), an independent natural gas and crude oil company that explores for and acquires, develops, produces and markets natural gas and crude oil resources. This stock is hasn't done much in 2012, with shares virtually flat on the year.

If you take a look at the chart for Petroleum Development, you'll see that this stock has been uptrending strong since the middle of January. During that uptrend, the stock has started to form a pattern of higher lows and higher highs, which is bullish price action. Now shares of Petroleum Development are within range of a potentially big breakout trade.

>>9 Gold, Oil Stocks That Rise on Bad News

Traders should watch PETD for a breakout trade if the stock can manage to take out $37.37 to $37.77 a share on heavy volume. Look for volume on a move above those levels that registers near or well above its three-month average action of 429,070 shares. A sustained high-volume move and close above those levels should set this stock up to re-test its next significant overhead resistance level at $39.50 a share, or possibly much higher into the mid-$40s.

Market players can look for long biased trades in PETD as the stock is trending above its 50-day moving average of $33.62. You can simply get long and anticipate the breakout trade, or you can just wait for the breakout trigger and buy off strength. One thing worth noting that the upside volume was huge on Thursday, so look for that pattern to continue of PETD makes a run at breaking out.

This is another breakout candidate that sports a large short interest. The current short interest as a percentage of the float for PETD is very high at 15.6%. If that breakout trigger soon, then look for the bears to cover some of their bets and help to push this stock much higher.

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