Mitek Systems

Another stock in the technology complex that's trading within range of triggering a near-term breakout trade is Mitek Systems ( MITK), which is engaged in the development, sale and service of software solutions related to mobile imaging applications and intelligent recognition software. This stock has been hammered by the bears so far in 2012, with shares down by over 35%.

If you take a look at the chart for Mitek Systems, you'll see that this stock recently failed to trigger a breakout above some near-term overhead resistance levels at $4.38 to $4.75 a share. After failing to take those levels out, the stock sold off hard and took out its 50-day moving average. Following that move, shares of Mitek Systems found some buying interest at around $2.72 a share, and then ripped back above its 50-day moving average with heavy volume. Now the stock has started to take out $4.38 a share, and it's quickly setting up to clear $4.75 a share.

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Market players should now look for long-biased traders in MITK if this stock can manage to trigger a breakout trade above some overhead resistance levels at $4.75 a share with high volume. Look for a sustained move or close above $4.75 with volume that registers near or above its three-month average action of 918,274 shares. If we get that action soon, then MITK will have a great chance of filling a previous gap that send the stock down from over $6 to under $3 a share. Some upside targets are $6.30 to possibly even its 200-day moving average of $7.08 a share.

You can look to buy MITK off any weakness to anticipate that breakout and simply use a stop somewhere around $4 a share. A better way to play this is to buy off strength once MITK takes out $4.75 with high volume. Place a stop just below $4.38 a share if you buy MITK off strength.

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