5 Stocks Setting Up to Break Out

Apple

One computer hardware player that's trading within range of a major breakout trade is Apple (AAPL). This company, along with its subsidiaries, is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. This stock is off to a hot start in 2012 with shares up over 40%.

If you take a look at the chart for Apple, you'll see that this stock sold off recently from a high of $644 to a low of $522.18 a share. After tagging that low, Apple has started to resume its uptrend with the stock now making higher highs and higher lows for the past month and change. That move is quickly pushing Apple within range of triggering a near-term breakout trade. That trade will hit once Apple takes out some near-term overhead resistance with above average volume.

Market players should now look for long-biased traders in AAPL if it can manage to trigger a breakout above some near-term overhead resistance at $581.50, and then above its 50-day moving average of $583.14 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 22,968,500 shares. If we get that action soon, then Apple could easily hit $600 to $620 in the near future.

Look for confirmation of higher prices in AAPL as long as it can maintain a trend above its 50-day moving average of $538.14 a share with strong upside volume flows. I really can't get excited about Apple unless it's trending above the 50-day, since a failure to take that level out could mean that the sellers are taking control of the stock back.

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