Stock Quotes in this Article: DE, EC, GOOG, MCD, SPY

BALTIMORE (Stockpickr) --Stocks are continuing to power through the week on the heels of one of the biggest single-week gains in the S&P 500 since 2009. And solid trading setups are coming out of the woodwork right now. Here’s a look at how you can take advantage this week.

I kicked off last week's column by saying that it “could be a big week for the bulls.” I wasn’t just talking about percentage gains (which certainly panned out) -- I was also talking about the technical significance of a bounce in the broad market. Now, with a “floor” set in the S&P, the bulls are certainly back in town.

The last few mini-rally sessions in the S&P 500 haven’t been quite as compelling. In the past, stocks have moved higher, but they’ve largely been missing market breadth. This time, stocks aren’t just moving higher -- they’re also pushing through key resistance levels. That’s a very bullish sign that traders shouldn’t be ignoring right now.

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    To be clear, I still think it pays to be tactical in this market, but traders can at least start to breath a little easier in July.

    That said, let’s take a look at some promising technical setups that are taking shape in Wall Street’s biggest-name stocks right now. In case you’re not familiar with ttechnical analysis, 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 by some measures, skilled technical traders can bank gains as much as 90% of the time.

    Every week, we take an in-depth look at large-cap stocks that are telling important technical stories. Here’s this week’s look at the technicals of five must-see stocks.

    SPDR S&P 500 ETF

    Before we get into any new names, though, I want to revisit a recommendation from last week that’s still very relevant from anyone who has skin in the game right now. I’m talking about the SPDR S&P 500 ETF (SPY), a fund that essentially mirrors the S&P 500 index. Last week, I said that “with the S&P bouncing, it looks like a good time to 'buy' the broad market” by picking up units of SPY.

    That turned out to be a good move -- the ETF has rallied 6.78% in those last five trading days.

    Now, though, investors and traders alike are wondering how much longer the rally can last. With the S&P breaking hard above its past 1,345 resistance level, I think that the index stands a solid shot at taking out previous highs in July. To do that, we’ll want to see the index settle a bit -- it’s looking pretty overbought now. Some sideways consolidation would do the trick without forfeiting any recent gains.

    As long as the S&P can hold its head above its 200-day moving average, I’d be a net buyer of stocks.

    Related: 10 Best-Performing S&P 500 Stocks of 2011

    McDonald’s

    A perfect example of the market’s recent strength comes in the form of McDonald’s (MCD). Shares of the fast food giant have been looking strong all year, but they’ve gone parabolic in the last couple of weeks. As a result, investors have been pouring attention (and cash) into this stock.

    McDonald’s showed traders a near-textbook example of a cup-and-handle breakout on June 28, crashing through resistance at $83. While I’ll concede that the stock’s month-to-date price action is impressive, McDonald’s is too far above its breakout level to be a justifiable trade right now.

    I’d suggest waiting for McDonald’s to show an intermediate reversal before buying. That said, there are similar plays that are only on the verge of making a big move right now.

    McDonald's, one of the 2011 Dividend Aristocrats, shows up on a recent list of Top Stocks to Buy and Hold Through 2011.

    Deere

    Agricultural and construction equipment giant Deere (DE) is a perfect example of that. Shares have churning sideways since the start of the year, trailing the S&P’s performance by a somewhat sizable margin. But don’t be fooled -- this stock could be a great momentum play this month.

    The biggest factor is the rounding bottom that’s been forming in shares since the start of June. That rounding bottom (which resembles the cup in MCD’s price chart) indicates that sellers have slowly been overcome by buyers in the last month. More importantly, it provides us with a breakout price to watch for at the stock’s $87 resistance level.

    Shares are testing that resistance level today. I’d suggest becoming a buyer once we see a definitive break above $87 -- if shares open for trading materially above that price, it makes sense to go long. Consider a protective stop just below the 200-day moving average.

    Deere shows up a recent list of 7 Buy-Rated Dividend Stocks to Buy.

    Google

    Even if Google (GOOG) isn’t the most visually attractive setup on the market right now, it’s another example of a stock that’s testing a key resistance level this week. Shares have been pushing hard intraday today, and look like they’ll still be above $546 resistance by the close. If that’s the case, an open above that price on Friday marks a very solid buying signal for traders.

    Google’s nearest support level is a bit lower than I’d normally like to see from a risk-management perspective. With that in mind, a protective stop just below the 50-day moving average is a good compromise -- particularly given the upside momentum this stock has right now.

    Google shows up on recent lists of 3 Funds' Best Stock Picks Ahead of Earnings and 10 Large-Cap Stocks With Upside.

    Ecopetrol

    Not all of this week’s Must-See Charts are showing bullish setups. Quite the opposite is taking place in shares of Columbian oil and gas company Ecopetrol (EC). A bearish head-and-shoulders setup in shares of this $85 billion industrial could accelerate selling in this name.

    A head-and-shoulder top is probably one of the most popular technical patterns out there among would-be traders. Simply put, it’s formed by two intermediate peaks in a stock’s share price (shoulders), with a larger peak in between them (head). Just because it’s a common setup doesn’t mean its not worth looking at -- a recent study shows that this pattern is both statistically and economically significant for traders.

    For Ecopetrol to become an actionable short candidate, we’d want to see shares break down below the stock’s neckline just below $42. 

    >>Practice your stock trading strategies and win cash in our stock game.

    -- Written by Jonas Elmerraji in Baltimore.

    RELATED LINKS:

     
    >>5 Short-Squeeze Stocks That Could Explode in 2011

     
    >>5 Stocks Ready to Pop on Earnings

     
    >>3 High-Momentum Stocks to Watch

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    To see this week’s trades in action, check out the High Volume Technicals portfolio on Stockpickr.

    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.