BALTIMORE (Stockpickr) --The broad market is shoving its way higher today, carving out larger gains for the first month of 2012. Already this year, the S&P 500 has rallied more than 3.19%, handily besting the flat performance of the whole calendar year 2011. And as traders continue to absorb positive earnings data, buying pressure continues to drive Mr. Market's price action.

That's why it makes sense to take a look at the promising technical setups forming in a handful of stocks right now.

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

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  • With that, here's a look at five trading setups that could deliver breakout gains to your portfolio this week.


    First up this week is Intel ( INTC - Get Report), the large-cap chipmaker that owns the dominant share of the market for computer processors. Intel has had a strong run so far in the last year, rallying more than 19% in spite of poor performance in the S&P -- now, shares could he headed higher thanks to a bullish setup in shares.


    Intel is currently forming an ascending triangle setup, a technical pattern that's identified by horizontal resistance to the upside of shares and uptrending support below them. Right now, that resistance level is at $26, a price area that shares of this tech sector giant have essentially hit their head on three times in the past quarter. Traders will want to see shares break out above that resistance level before it makes sense to be a buyer of this stock.

    Intel's earnings call on Thursday could be the next big fundamental catalyst for shares. If positive fourth quarter numbers propel shares above $26, investors will have an added technical catalyst to count on as well.

    Sealed Air Corporation

    Another strong example of an ascending triangle setup is Sealed Air Corporation ( SEE - Get Report), a mid-cap packaging maker that's coming off of its October lows right now. Although ascending triangles are continuation patterns more often than not (that is, they come after an upward move), this firm's pattern is actually a bottoming formation. Either way, the trading implications are exactly the same...Like Intel, Sealed Air is currently sporting a horizontal resistance level (at $19 in the case of this stock), and uptrending support. That resistance level at $19 exists because a glut of supply of SEE shares has existed at or above that price in the past - a breakout above $19 indicates to traders that the excess supply above $19 has been completely absorbed by buyers. More significantly, it means that one of the biggest stumbling blocks to upside in SEE has been taken out.Adding confirmation to this trade is momentum, as measured by 14-day RSI. SEE's RSI has been locked in a strong uptrend since back in August. The fact that the uptrend remains in force adds some significance to a breakout - still, it's essential to wait for the move above $19 to happen before this can be called a high probability trade.

    Dover Corp.

    Dover Corp. ( DOV - Get Report) is a good example of a different kind of upside setup. Right now, this stock is showing traders an inverse head and shoulders pattern, a bullish setup that's identified by two intermediate troughs (shoulders) separated by a deeper trough (head). The unlike the ascending triangle, which represents a gradual shift to strength among buyers, the inverse head and shoulders is an indication that sellers are getting exhausted in shares of DOV.

    From a textbook standpoint, pattern triggers when shares push above their neckline. In Dover's case, that happened in yesterday's session, when shares opened above that neckline for a second day in a row -- that added degree of confirmation makes a breakout signal stronger in DOV.

    Even though the head-and-shoulders (both inverse and regular) pattern may be one of the most well known technical patterns out there, don't think that it's lost its usefulness as a trading indicator. A recent academic study conducted by the Federal Reserve Board of New York suggests that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits that would have been both statistically and economically significant."

    If you decide to take this trade, I'd recommend a protective stop just below the 200-day moving average.


    Things are looking a bit less directional in shares of Hewlett-Packard ( HPQ - Get Report) right now. This computer giant has been the center of quite a bit of drama lately, from CEO scandals to earnings leaks. For the last several months, HPQ has been trading inside of a previous gap made back in August, a range that's sort of like a "void" for share prices - since trades didn't take place in that range previously, shares have a tendency to get stuck there.

    That scenario is creating a textbook example of an If/Then Setup in shares of HPQ. Essentially, an If/Then Setup happens when shares get stuck in a sideways consolidation channel bounded by strong horizontal support and resistance. Unlike the other patterns we've looked at today, this particular type of trade doesn't have directional bias until shares break outside of the channel.

    That doesn't make it any harder to trade, however. Simply put, HPQ's If/Then Setup works like this: If shares break out above $28.50 resistance, then buy. If shares break down below $25 support, then H-P is a short candidate again. Either way the trade pans out, I'd recommend keeping a protective stop back just within the channel.

    Dominion Resources

    Last up this week is Dominion Resources ( D - Get Report), a large-cap electric utility that's been rallying approximately 17% in the last year. Like many of its industry peers, Dominion pays out a hefty dividend yield (3.89%), but unlike many of them, the firm sports double-digit net margins. Earnings on January 27 should be the next major catalyst for shares.

    In the meantime, an uptrending channel is offering a trading opportunity in this stock. While Dominion has been rallying for a while now, that rally has been bounded by trendline support and resistance, dynamic price levels that have put the reigns on Dominion's price action. Now, with shares nearing trendline support, traders could have an optimal opportunity to buy a position in this uptrending issue.

    "Could" is the operative word in that sentence. Trendline support levels do invariably fail, so it's crucial not to be left holding the bag if this one does now. Wait for a bounce higher off of support before taking a position. While waiting will mean sacrificing a couple of points on the trade, it dramatically increases the probability of booking a profit on this stock.

    To see these plays in action, check out the Technical Setups for the Week portfolio at Stockpickr.

    -- Written by Jonas Elmerraji in Baltimore.


    Follow Stockpickr on Twitter and become a fan on Facebook. At the time of publication, author had no positions in stocks mentioned. Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia , and has been featured in Investor's Business Daily , in Consumer's Digest and on

    Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on