WINDERMERE, Fla. ( Stockpickr) -- A market like the one we're in right now can offer great opportunities to find breakout stocks, to the upside and downside. Because market has started to trend lower, you can easily isolate the strong stocks, or the ones that are breaking out to the upside. You can also easily find the weakest stocks in the market that are setting up to break their support level and head much lower. These weak stocks are usually trending with the market and will simply follow the broad market indexes lower.A breakout is when a stock makes a move through a significant level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street players love to see upside breakouts because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. They especially love to see this action in a weak market like we have right now because it sticks out like a sore thumb in a red tape. An upside breakout can also take a stock to a new high that will generate a lot of interest as the stock shows up on sophisticated software that scans for this type of action. Here 's a look at a number of stocks that could be setting up to become great breakout candidates. A breakout below a support level is usually seen as a warning sign for a security. This is simply because when a stock breaks support that has held up for a significant amount of time, it could mean that large institutions are getting rid of their shares.Another way to play the breakout chart pattern is to look for stocks that fail to trade above previous resistance, which often leads to significant selloffs. This pattern is known as the failed breakout.
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