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5 Stocks Setting Up to Break Out


One more stock that's close to triggering a big breakout is Tesco (TESO - Get Report), which is engaged in the designing, manufacturing and service delivery of technology-based solutions for the upstream energy industry. This stock is off to a decent start in 2012, with shares up over 16% so far.

If you look at the chart for Tesco, you'll notice that this stock has been trading range bound for the past month between $13.31 on the downside and $14.87 on the upside. During that timeframe, the upside volume days have easily outpaced the downside volume days, which demonstrates that large traders are accumulating the stock. A high-volume move outside of that recent range should setup TESO for its next major trend.

Traders should now look for long-biased trades in TESO if this stock can manage to break out above some near-term overheard resistance at $14.87, and then above its 200-day moving average of $14.90 with high volume. Look for a sustained high-volume move or close above those level that's near or well above its three-month average action of 180,366 shares. On Thursday, volume registered over 494,000 shares and the stock closed at $14.76 a share.

Traders should consider getting long this stock as long as it's trending above $14.87 and $14.90 with strong upside volume flows. If TESO can sustain a trend above those price points, then this stock has a great chance to make a run at its most recent highs of $16.81 to $17.54 a share. I would no longer look for that move if TESO were to reverse course and move back below its 50-day moving average of $14.39 with high volume.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


Follow Stockpickr on Twitter and become a fan on Facebook.
At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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