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5 Big Stocks Set to Slingshot Higher

Skyworks Solutions

Semiconductor firm Skyworks Solutions (SWKS - Get Report) has been getting a lot of investor attention in the last few months, thanks in no small part to the nearly 60% rally that shareholders have enjoyed so far in 2012. Here's how to know if buyers of SWKS are in store for bigger gains:

Right now, this stock is forming a rectangle pattern, creating what I like to call an "if/then trade." Put simply, a rectangle is a pattern that's bounded by horizontal resistance above shares and support below them. Rectangles are common after big moves (like the one in SWKS this year) because they represent consolidation, a chance for traders to mentally absorb the big price moves in shares before they plan their next steps. For SWKS, the important levels to watch are resistance at $29 and support at $23.50.

>>10 New Stocks on All-Star Fund Managers' List

Put simply, if shares break out above $29, then the stock is a buy. Otherwise, if shares fall below $23.50, then SWKS is a short candidate.

Volume has been declining as the pattern progressed, a good sign. We'll want to see higher volume when SWKS breaks out of the pattern; that indicates that buyers are participating in the breakout.

As of the most recently reported quarter, Skyworks was one of the top holdings at Lee Ainslie's Maverick Capital.

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EMC $28.03 -0.60%
MCD $99.11 -1.10%
SPF $8.60 -0.17%
ROP $168.71 1.20%
SWKS $91.55 1.50%


DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

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