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TheStreet Open House

5 Big Stocks to Trade for Gains

Stocks in this article: WMT CHL PTR ADI MAT

Wal-Mart

First up this week is retail behemoth Wal-Mart (WMT - Get Report), a stock that's been on the heels of a strong rally in the last year. Wal-Mart's shares have climbed 15% in the past 12 months, offering investors nearly triple the returns of the S&P 500 over that same period. And right now, the technicals point to bigger gains in the near-term.

That's because Wal-Mart is currently forming an ascending triangle pattern, a setup that's formed by a horizontal resistance level to the upside, and uptrending support below shares. Essentially, as WMT bounces in between those two technical levels, it's getting squeezed closer and closer to a breakout above that $62.50 resistance level; that breakout is our buy signal for shares.

Momentum, as measured by 14-day RSI, adds some extra confidence in this setup -- it's been trending higher since the ascending triangle started forming at the start of last month. Volume is textbook in shares of Wal-Mart too. Trading activity has been declining throughout the pattern, something that's actually a positive sign; we'll want to see a volume spike on the breakout as traders participate in the move higher.

Ultimately, those supporting factors add confidence to the pattern, but it's crucial to wait for price to move above $62.50 for WMT to become a high probability trade.

I also featured Wal-Mart, one of 6 Companies Battling for Americans' Grocery Money, recently in " 5 Stocks Primed for Bigger Dividends."

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