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TheStreet Open House

5 Foreign Stocks With Breakout Trade Potential

Telecom Italia

First up is Telecom Italia (TI), one of the biggest mobile and fixed line operators in Italy, Brazil, and Argentina. While the firm has gotten beaten down in the last 12 months, falling close to 20% as the Italian economy came under siege, things are definitely starting to look up for shareholders.

Right now, the pattern to watch is a double bottom in shares of TI.

Telecom Italia formed the second bottom in its double bottom back in early February, setting strong support at $10 -- that's a key psychological level. Those two bottoms tell us that there's a major glut of demand at $10, where buyers suddenly become more eager to pick up a bargain than sellers are to unload shares. The fact that two bottoms hit at precisely the same level shows us that $10 is a price where there's a consistent pocket of demand, not just a short-term one.

>>5 Stocks Setting Up to Break Out

The breakout level in TI is the peak at $13.50 that separates the two bottoms. When shares push up through that peak, we've got a signal that buyers are in control of this telco.

Until that happens, your best bet is to let buyers and sellers slug it out on their own.

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