By Roberto PedoneWINDERMERE, Florida ( Stockpickr) -- Market-players across the globe are closely watching the U.S. bond and stock markets to see which asset class is going to break out first in the near future. The S&P 500 has been trading range-bound since May between the levels of 1040 and 1130. Market bulls are hoping for a breakout above 1130 to signal that the bull market in stocks is back. A breakout in stocks would almost certainly lead to more money flowing out of bonds. As for the bond market, if you take a look at the iShares Barclays 20+ Year Treasury Bond Fund ( TLT - Get Report) you will see that a breakout won't occur until this ETF trades above $109 a share. With the TLT currently trading at around $105, you can see that a breakout for bonds isn't far off. If bonds continue to see strength and even break out, it will mean the risk trade in equities will be taken off and stocks will most likely trade lower. These same savvy market players are also watching the action in silver and gold, which are both approaching new record highs and fresh breakouts. If either of these asset classes breaks out, it could mean the fear trade and flight to hard assets trade is back on. Trading breakouts is not a new game on Wall Street. This strategy has been pioneered by legendary traders such as 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 >>>Must-See Charts: BHP Billiton, Exxon
One stock that has recently broken out to new record highs is Yum! Brands ( YUM - Get Report), a quick service restaurant with over approximately 37,000 units in more than 110 counties and territories. Its popular restaurants include KFC, Pizza Hut, Taco Bells and Long John Silver.
Another stock that looks ready to breakout is Rovi Corporation ( ROVI). This company provides digital entertainment technology solutions for the delivery and management of entertainment content. Basically, Rovi's products help consumers find and then connect to TV shows, movies and music on any capable device they own. The company also creates electronic program listings for cable TV companies and other carriers.
Market players should keep an eye on DirecTV Group ( DTV) for a possible breakout play. This company is a provider of digital television entertainment in the U.S. and Latin America. This stock is a pure play on the return of the NFL football season, due to the company's NFL Sunday Ticket package, which allows subscribers to view any NFL game.
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One final stock that could be setting up to see some breakout action is Herley Industries ( HRLY), which supplies microwave products and systems to defense and aerospace entities worldwide.
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