These four stocks are at critical junctures, a breakout higher could set a bullish tone for weeks to come, while a failure to launch will attract  sellers and short-selling. Completely different price action heading into these important resistance levels will likely result in failed breakouts in some stocks, and successful upside breakout in others. Therefore, bullish and bearish, short-term and longer-term traders should all pay attention.

Pandora Media (NYSE:P) is consolidating in a range between $28.26 and $23.03 since mid-September. The November 5 close at $27.88, up 8.61% on the day, brings the broadcasting company very close to that high. A daily close above that high sets the stage for the uptrend to continue, with the current range simply a consolidation on the way to a target of $33. A failed upside breakout, or failure to reach the high (unlikely) will attract selling though, pushing the stock toward support at $25 to $23. A drop below $23 ends the uptrend, likely sending it to $19 to $18.

After a strong pullback from the August high at $13.51, Marvell Technologies (Nasdaq:MRVL) is once again approaching this level after an 8.53% jump on November 5. While a rise above $13.51 is likely to attract additional interest to the stock, and is a strong resistance area, the price has already shown signs of starting a new uptrend. Pullbacks, that stay above $12, present buying opportunities, with the targets at $13.90, $14.90 and $15.75. The multiple targets are provided based on how aggressively the stock moves through the $13.50 region. Failure to break through the $13.50 region sends the stock lower to probe to support at $12 and $11.

AOL (NYSE:AOL) is prone to choppy range-like trading, therefore if historical precedent continues, the strong rally from $37 to $42 on November 4 and 5 is likely to be stifled between $42 and $44. $42.12 was the high set earlier this year, eclipsed by the intraday high at $42.42 on November 5. The 2012 high at $43.93 serves as additional resistance, creating a region of resistance likely to hold off this rapid advance, and sending the stock back below $40. Since mid-October the price has been making higher highs and higher lows--a short-term uptrend--but this price structure will need to continue in order for the stock to stand a chance of staying above $42.

Michael Kors (NYSE:KORS) on the other hand has been in a strong uptrend, but stalled--with a slight upward bias--since early September. The price was consolidating between $78.83 and $70.59, but appears to have broken out on November 5, hitting a high of $80 and closing at $79.13. If the price can hold above the $78.50 region for several days it will help confirm the breakout. If the breakout continues, the next target is $84. An inability to hold above $78 means the consolidation is likely to continue, with the price re-testing the $73 region. A drop below $70 signals the uptrend is likely over and a move toward $63 is probable.

The Bottom Line

The likelihood of a stock breaking through a support level often depends on the price structure as it approaches the level in question. Pandora and Michael Kors are both in uptrends which makes the break higher more likely, since current resistance is likely part of a consolidation. AOL and Marvell on the other hand have shown short-term strength, but that could fade by the time resistance is reached. These stocks lack the overall momentum higher which make them a high probability breakout stock. Regardless of the price structure heading into these important resistance areas, expect a pop higher or lower depending on whether the breakout succeeds or fails.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Related Articles
  1. Chart Advisor

    Commodity ETFs And Chart Patterns

    The varying chart patterns within these ETFs, as well as the assortment of commodities the ETFs represent, present a wide range of trade possibilities to investors and traders.
  2. Trading Systems & Software

    How To Spot And Screen For Chart Patterns With Finviz

    Learn how to use Finviz software for finding chart patterns.
  3. Chart Advisor

    Triangle Chart Patterns Set To Break Out?

    Over the last several weeks many stocks have been developing triangle patterns, often considered a continuation pattern. Is another a break higher likely, or is a break down coming?
  4. Forex Education

    Most Commonly Used Forex Chart Patterns

    These chart patterns provide entries, stops and profit targets that can be easily seen.
  5. Charts & Patterns

    Analyzing Chart Patterns

    Learn how to evaluate a stock with a few easy-to-identify patterns.
  6. Investing

    Redefining the Stop-Loss

    Using Stop-losses for trading doesn’t mean ‘losing money’, but instead think about the money you'll start saving once you learn how they work.
  7. Chart Advisor

    3 Ways to Trade the Rising Volatility

    With volatility increasing in the markets, many are turning to these three volatility-capturing exchange-traded products.
  8. Chart Advisor

    Big Double Top Patterns On the Verge of Breaking

    These stocks have created big double top chart patterns, and are on the verge of breaking the patterns to the downside--a bearish signal.
  9. Chart Advisor

    Gold Struggles to Climb Higher and May Fall Soon

    Traders will be watching the price of gold over the coming weeks. We'll take a look at how a couple major moving averages are suggesting that the next move could be lower.
  10. Technical Indicators

    Use Market Volume Data to Determine a Bottom

    Market bottoms often carve out classic volume patterns that let observant traders make fast and accurate calls.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  3. Indicator

    Indicators are statistics used to measure current conditions ...
  4. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  5. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  6. Sucker Yield

    When an investor has essentially risked all of his capital for ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  3. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  4. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!