Another stock that's starting to trend within range of triggering a major breakout trade is Aruba Networks (ARUN), which provides enterprise mobility solutions that enables secure access to data, voice and video applications across wireless and wireline enterprise networks. This stock has been hit hard by the sellers so far in 2013, with shares off by 29%.
If you look at the chart for Aruba Networks, you'll notice that this stock has just started to bounce higher off some near-term support at $13.91 a share. This bounce is coming after shares of ARUN spiked sharply higher during the last month from $12.38 to $15.64 a share and then pulled back to that $13.91 low. This bounce is starting to push shares of ARUN within range of triggering a major breakout trade.Traders should now look for long-biased trades in ARUN if it manages to break out above some near-term overhead resistance levels at $15.02 to $15.64 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 4.10 million shares. If that breakout triggers soon, then ARUN will set up to re-fill some of its recent gap down zone from May that started at $18.10 a share. Any high-volume move above $18.10 and its 50-day at $18.28 will then give ARUN a chance to re-fill another recent gap down zone that started near $22 a share. Traders can look to buy ARUN off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $13.91 a share, or around $13 a share. One can also buy ARUN off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. This is yet another name that the bears love, since the current short interest as a percentage of the float for ARUN is very high at 12.2%. If that breakout triggers soon, then we could see a fast move into that gap as the bears rush to cover some of their positions.
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