5 Stocks Setting Up to Break Out

Verizon

One final stock that's trading within range of a major breakout trade is communications giant Verizon Communications (VZ), a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. This stock is off to a slow start in 2012, with shares up just 3% so far.

If you look at the chart for Verizon, you'll see that this stock has been uptrending strong since its April low of $36.80 a share. During that uptrend, shares of Verizon have consistently made higher lows and higher highs, which is bullish technical price action. That strength has now pushed VZ within range of triggering a breakout trade that would push the stock into new 52-week high territory.

Traders should now look for long-biased trades in VZ if it can manage to trigger a break out above some near-term overheard resistance at $41.43 a share with high-volume. Look for a sustained move or close above that level with volume that's near or well above its three-month average action of 14.5 million shares. If we get that action soon, then VZ has a great chance to trade up towards its next significant overhead resistance levels near $45 to $50 a share.

Traders should now consider getting long VZ as long as it's trending above its 50-day moving average of $39.06 a share, and above that breakout level of $41.43 a share. I would use a stop just below the 50-day if we see some weakness soon, or I would buy a strong volume breakout over $41.43, and then simple use a stop at around $40.50 a share. Volume on Thursday clocked in at 15.6 million as VZ pushed near that breakout level, which is a bullish sign since it's above the average action.

Verizon shows up on a recent list of 5 Stocks Ready for Rising Data Demand.

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

-- Written by Roberto Pedone in Winderemere, Fla.

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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 Beconequity.com and maintains the website Maddmoney.net, 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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