Bristol-Myers Squibb

Bristol-Myers Squibb ( BMY) is a stock that's already breaking out -- and it's breaking out hard. BMY has had some huge momentum in recent months (it's up more than 35% year-to-date), and after a quick correction in late April, this stock has resumed it's upward trajectory. Yesterday's massive leg higher is a good sign of that.

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The firm's presentation at a health care conference is being given credit for yesterday's 4.7% move, but ultimately what caused the move isn't nearly as important as what the move actually accomplished. For BMY, yesterday's trading pushed shares above resistance at $42, completing a rounding bottom pattern in shares. That's a buy signal.

Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. After all, head and shoulders setups, rounding bottoms and other pattern names are a good quick way to explain what's going on in this stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

BMY's price action indicated a gradual shift in control from sellers to buyers. Since resistance at $42 was a place where sellers had previously been more eager to sell and take gains than new buyers were to keep bidding on shares, the move through $42 was significant yesterday. And not just for its size.

The 50-day moving average has been a good proxy for support since January; it's a good place for a stop loss.

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