One stock that's trading within range of triggering a near-term breakout trade is Stec ( STEC), which provides enterprise-class Flash solid-state drives that are designed to increase the performance of enterprise-storage systems and servers that companies use to retain and access their critical data. This stock has been hit ha rd by the sellers so far in 2013, with shares off by 25%.
If you take a look at the chart for Stec, you'll notice that this stock dropped sharply from its March high of $5.61 a share to its recent low of $3.32 a share. During that plunge, shares of STEC were consistently making lower highs and lower lows, which is bearish technical price action. That said, STEC has now started to find buying interest at around $3.40 to $3.50 a share and it looks ready to reverse its downtrend and break out and head higher.Traders should now look for long-biased trades in STEC if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of $3.81 a share and then above more resistance at $3.90 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 484,086 shares. If that breakout triggers soon, then STEC will set up to re-test or possibly take out its next major overhead resistance levels $4.60 to its 200-day moving average at $5.23 a share. Traders can look to buy STEC off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.46 to $3.32 a share. One could also buy STEC off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below $3.46 a share. This stock is a favorite target of the short-sellers, since the current short interest as a percentage of the float for STEC is extremely high at 19.3%. If that breakout triggers soon, then STEC could easily experience a large short-squeeze, so make sure to have this name on your breakout trading radar.