Traders should now look for long-biased trades in NAT once it manages to break out above some near-term overhead resistance level $8.96 to $9.60 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 580,138 shares. If that breakout triggers soon, then NAT will set up to re-test or possibly take out its next major overhead resistance levels at $10.50 to $11.50 a share.

One could look to buy NAT off any weakness to anticipate that breakout and then simply use a stop that sits just below some near-term support at $8.20 a share. Traders can also just buy off strength once NAT takes out $8.96 a share with volume and then simply use the same stop below $8.20 a share. I would look to add to either position once NAT clears its 50-day at $9.60 with volume.

Keep in mind that the current short interest as a percentage of the float for NAT is rather high at 10.6%. This is a decent amount of shorts involved in NAT, so we could easily see a large short-squeeze develop if the stock triggers that breakout soon.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication the author held no positions in any of the stocks mentioned.
Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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