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5 Breakout Stock Plays

Stocks in this article: RLDPAMTCMGCGAFVE

Parametric Sound

Another stock that's starting to move within range of triggering a major breakout trade is Parametric Sound (PAMT), which is focused on delivering directed parametric sound solutions to customers primarily in digital signage, point-of-purchase, in-store networks and related markets that benefit from sound that can be focused and controlled in specified locations. This stock has been on fire so far in 2012, with shares up a whopping 58%.

If you take a look at the chart for Parametric Sound, you'll see that this stock has been uptrending strongly for the last two months, with shares moving from a low of $3.49 to its recent high of $7.38 a share. During that uptrend, shares of PAMT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PAMT within range of triggering a major breakout trade.

Market players should now look for long-biased trades in PAMT if it manages to break out above some near-term overhead resistance at its 200-day moving average of $6.96 a share and then once it clears more overhead resistance levels at $7.38 to $7.39 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 55,087 shares. If that breakout triggers soon, then PAMT will set up to potentially make a run at its 52-week high of $11.74 a share.

Traders can look to buy PAMT off any weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support at $6.07 a share. One could also buy off strength once PAMT clears those breakout levels with volume and then simply use the same stop at around $6.07 a share. Traders could also key off its 50-day at $5.35 a share for a potential stop level if you buy off weakness.

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