Teradyne

One name in semiconductor complex that's very near trigging a big breakout is Teradyne ( TER), a global supplier of automatic test equipment. This stock is off to a hot start in 2012, with shares up over 24%.

If you look at the chart for Teradyne, you'll see that this stock has been in a monster uptrend since it tagged $11.63 a share back in November of last year. During that uptrend, the stock has been consistently making higher lows and higher highs, which is bullish price action. Whenever any stock makes higher lows and higher highs, it shows that the stock is in high demand among large traders, since they're paying up to buy it on any dips.

Now TER is setting up to trigger a big breakout sine the stock is very close to taking out some near-term overhead resistance levels.

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Market players should look for long biased traders if TER can manage to take out $17.13 to $17.50 on high-volume. Look for volume on a move above those levels that's near or well above its three-month average action of 4.4 million shares. If we get that action soon, then this stock has a strong chance to trade back towards its next significant overhead resistance level at $19 a share.

Keep in mind that volume doesn't have to be there for a stock to break out and trend higher, it's just preferred to see a strong volume move since it raises the probability of the breakout working.

Traders should now look for long-biased trades in TER if that breakout triggers soon. You could buy it off weakness and anticipate the breakout with a mental stop just under some near-term support at $16.25 a share. One could also just buy off strength once the stock takes out $17.13 with volume, and then add more shares on a high-volume move over $17.50.

This is a heavily shorted stock since around 11.4% of the tradable float is currently sold short by the bears. That high short interest could spike this stock back towards $19 quickly, so keep this name on your breakout trading radar.

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