Stock Quotes in this Article: AAPL, AMZN, C, MS, TRV

 BALTIMORE (Stockpickr) -- It’s “data dump Thursday,” but investors don’t care this week.

That’s because it’s the technical factors, not fundamental news, that are ruling stocks this week. Investors feel overwhelmed right now, and that’s understandable -- we’ve been trading anything but a quiet and collected market this year. Drama from Europe, unclear earnings, and more than a few scandals have all contributed to the overload investors are feeling right now.

So that’s a big part of why investors are largely ignoring today’s data frenzy: jobs numbers, housing data and manufacturing numbers. But the problem is that investors have been ignoring this summer’s rally as well. On Tuesday, in "5 Toxic Stocks to Sell Now," I mentioned that the rally starting in June has accounted for 84% of the S&P 500’s gains in 2012. That’s not some insignificant move upward.

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In fact, the broad market has risen 10% since the first week of June, delivering more gains in those last couple months than Mr. Market has averaged annually in the last decade.

Today, we’re taking a technical look at five huge stocks that could slingshot higher from this rally.

If you're new to technical analysis, here's the executive summary.

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Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.

Every week, we take an in-depth look at big names that are telling important technical stories. Here's this week's look at the technicals of five high-volume stocks ready to move higher.

Apple

We’ll start off today by taking a refreshed look at Apple (AAPL). In spite of all the arguments taking place over this stock this summer, Apple has had a truly stellar run in 2012. So far this year, it has rallied more than 55%, increasing in market value by hundreds of billions of dollars.

That sort of ascent has obviously caught investors’ attention, and left people wondering where it’s going next. So here’s the big question: Should you own Apple right now?

The short answer is yes. The last time we checked in on Apple was at the end of July, after the firm’s earnings call left investors wondering if it was time to sell. As expected, it wasn’t; shares of the firm bounced off of trend line support like clockwork, making their way through two minor resistance levels (now support levels S1 and S2 on the chart above), before ultimately coming up to test ultimate resistance at $640.

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There’s no two ways about it: $640 is make-or-break time for AAPL. The last time shares attempted to push through that level, bids got overwhelmed by sellers’ gains-taking. This time, investor sentiment may have changed enough to give investors the breakout they’re looking for.

If you already own Apple, I’d recommend holding out to see if shares can pull of the breakout above $640 -- and if you don’t own shares, the time to buy is immediately after the breakout. There are enough support levels under foot right now to justify holding onto shares.

Apple, one of David Einhorn's Greenlight Capital holdings, was also featured recently in "5 Stocks Poised for Breakout."

Morgan Stanley

Meanwhile, financial giant Morgan Stanley (MS) is looking primed for a change of luck. Investors in the $29 billion firm haven’t exactly been lucky this year. Since the first trading day of January, Morgan Stanley has slipped close to 4% while the rest of the financial sector has rallied almost 11%.

That’s meaningful underperformance. But here’s why MS could be a slingshot stock this week too.

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Morgan Stanley is currently forming a double bottom pattern, a setup that’s formed by two swing lows that show up at approximately the same level. The buy signal comes on a breakout above the peak that connects the two lows, in Morgan Stanley’s case right at $15. With shares just below that breakout price this week, shares of the firm could be in store for a breakout sooner rather than later.

If you decide to buy MS on the move above $15, I’d recommend keeping a tight stop loss.

Citigroup

Another financial stock that’s showing traders a nearly identical pattern this summer is Citigroup (C). Like Morgan Stanley, Citi is forming a double bottom pattern, with shares just a hair’s breadth away from breaking out above resistance at $29. Shares made their bottoms quickly -- a good sign that shows shares were able to catch a fast bid at both bottoms, prices that investors perceived to be “bargains” for shares of Citi.

Momentum, measured by 14-day RSI, adds some extra credence to Citi’s setup right now. It’s been in a solid uptrend since before the stock’s first bottom, and the uptrend remains intact today. Since momentum is a leading indicator of price, Citi’s RSI trend line bodes well for investors who want to buy this reversal pattern’s breakout.

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Again, as with MS, it’s very good practice to keep a tight protective stop in Citi. Remember, your stop loss level dictates your risk on this trade – I’d suggest keeping a stop at $28 if you’re risk averse. You don’t want to wait until shares move down to their bottoms at $25 before stopping out; that’s way too much risk.

Citigroup, one of Bruce Berkowitz's holdings, shows up on a list of 4 Large Bank Stock Picks From Deutsche Bank.

Travelers

Now let’s move from Citigroup to a stock that’s a former unit of Citigroup: Travelers (TRV). Travelers probably isn’t most people's idea of a trading vehicle -- it’s a $24.6 billion insurance firm, after all. But this stock is forming a bullish setup in shares right now, indicating that the supply-demand relationship in TRV is offering up a favorable trade.

Here’s what to watch for:

Travelers is forming a nearly textbook ascending triangle pattern, a setup that’s formed by horizontal resistance and uptrending support. Essentially, as shares bounce in between those two significant price levels, they’re getting squeezed closer and closer to a breakout above resistance (at $64.75, in TRV’s case). That breakout is the buy signal for shares.

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Volume adds some confirmation to this setup -- trading volume has been declining over the course of the pattern, yet another factor that makes the triangle in TRV a “textbook” trade. Ideally, we’ll want to see volume snap higher on the breakout, a move that indicates that buyers are participating in an important move.

Amazon.com

Last up is Amazon.com (AMZN), a stock that’s forming the same setup as the one in Travelers. AMZN is making an ascending triangle pattern right now, with resistance at $238 and uptrending support coming in below shares. Amazon’s pattern doesn’t look exactly like TRV’s -- it started out with a gap higher, and the first swing high in the pattern fell just short of our $238 resistance level -- but that’s a good example of why price patterns are sort of the lowest common denominator in technical trades.

You probably realize that patterns don’t work because of some magical geometric force in the market. Instead, they work because they’re simple ways to describe the supply and demand forces at work in a given stock; supply and demand, after all, are the only two forces that impact a stock’s price.

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So, in real-world terms, the resistance level at the top of AMZN’s pattern indicates that there’s a glut of supply of shares of AMZN above $238. Maybe it’s a price where investors start to think that the stock is getting expensive, and it makes sense to take gains. The critical factor is that a breakout above $238 means that buyers have absorbed that excess supply of shares and removed the biggest upside barrier for prices.

When an upside barrier (like a pile of sellers) gets removed, traders are left with a high-probability time to buy. For Amazon, I’d recommend keeping a protective stop just under the 50-day moving average.

To see this week’s trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.