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TheStreet Open House

5 Huge Stocks Set to Slingshot Higher

Stocks in this article: MSFTAVBHMCCOFT

AvalonBay Communities

Residential REIT AvalonBay Communities (AVB) has been staging an orderly climb in 2012, bouncing in between two parallel trend lines called a channel. That orderly ascent is important -- it provides traders with high probability levels for AVB to hit. As a result, we've got another upside trade in this stock.

The uptrending channel in AvalonBay has been intact since before the start of the year, and shares have been obedient: the stock has bounced off of a trend line nine times over the course of 2012, a number that adds confidence to the strength of the channel. In an uptrending channel, the optimal time to buy comes on a bounce off of support.

>>5 Unloved Stocks to Crush the S&P

There are two reasons for that. First, it's the lowest point in the channel (and thus has the farthest to go before it hits resistance), and second, it's got the lowest risk because you'll know instantly if you're wrong (a breakdown below support means that the channel is no longer valid, after all).

With AVB bouncing off of trendline support right now, it makes sense to be a buyer here.

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