One stock that could be setting up for a sharp move higher is Primo Water ( PRMW), a provider of three- and five-gallon purified bottled water and water dispensers sold through retailers. The stock has been crushed so far in 2011, with shares off by over 50%. If you take a look at the chart for Primo Water, you'll see that this stock recently gapped down huge in mid-August from over $13 a share to a recent low of $3.71 a share. Following that gap down, the stock ran up to $6.95 a share and has now started to trade sideways from around $6 to $6.95 a share. This sideways action is now setting the stock up to break out and make a run at filing some of that massive gap down from August. Traders should now watch for a breakout if PRMW manages to move above some near-term overhead resistance at $6.95 a share. Another key resistance level is $8.23 a share, which is the high for the stock from that big gap-down day. I would watch for a strong volume move above both of those levels that's tracking in close to or well above its three-month average volume of 557,000 shares. If that happens, then this stock could easily spike up large toward $10 to $12 a share in very short order. One could be a buyer of this stock once it clears $6.95 a share with volume, or you could buy it off any weakness with a stop just below $5.81 a share. I would add aggressively to any long position if it then takes out $8.23 with strong volume. This stock has a notable short interest as a percentage of the float of 7.2%. It's worth pointing out that the bears have also been increasing their bets from the last reporting period by 26.2%, or by about 296,000 shares. If we get a sustained move over $6.95 and $8.23 a share then we could easily get a monster short-squeeze. Primo Water shows up in the portfolio of Chuck Akre's Akre Capital Management.