By Roberto PedoneSome market-players think that once the overall market has stopped trending higher, trading stocks that are breaking out is a losing cause. That just isn't the case. No matter what type of market is developing -- bull or bear -- there are always stocks and sectors emerging as the new leaders. For example, the silver and gold sectors are starting to heat up, and new breakouts are occurring in many of the mining stocks. This action is taking place as the overall equity markets continue to lag in performance. Indeed, watching for breakouts can help investors catch the next big trend or fundamental shift in the markets. A major fundamental change will force money managers to rotate cash into new sectors. For this reason alone, investors should always be paying attention to which stocks and sectors are breaking out. Trading breakouts is not a new game on Wall Street. This strategy has been pioneered by legendary traders, including William O'Neal, Stan Weinstein and Nicolas Darvas. A breakout occurs 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 an upside breakout because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. An upside breakout can also take a stock to new highs, which 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 are already breaking out, or could be setting up to become solid breakout stock plays.
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One name that is starting to break out is Riverbed Technology ( RVBD). This company provides solutions to the fundamental problems of wide-area distributed computing in the U.S. and internationally.
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Another stock that could be setting up to break out is Silver Wheaton ( SLW), a mining company that generates its revenue primarily from the sale of silver.
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Investors should put shares of Eldorado Gold ( EGO - Get Report) on their radar for a possible breakout stock play. This company is engaged in gold mining and related activities including, exploration, development, extraction, processing and reclamation.
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One final stock that could be setting up to break out is Alberto-Culver ( ACV - Get Report). This company develops, manufactures, distributes and markets beauty care products as well as food and household products in the U.S. and around 100 other countries.
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