"The entire U.S. stock market is on the verge of a major breakout", says Roberto Pedone from Stockpickr. "The bears aren't going to want to hear this, but all three major U.S. indices are within a stone's throw of taking out their 52-week highs. To put things even more into perspective, this was the best first quarter for stocks since 1998."

Actually, we agree. When the Fed is pumping as much as he is now into the economy, two things are most likely to happen: inflation and very bullish markets. So let's all make some good money trading in order to afford all those higher prices for the goods we consume. What choice do we have, really?

Here is a glimpse of the technicals that certainly appear to back-up the thesis:

         

"The area to watch on the Dow Jones Industrial Average for an official breakout now is a close above 12,391. On the S&P 500, the breakout levels to watch are for a close above 1,332 and 1,344, and on the Nasdaq we also need a close above 2,800 and then 2,840," writes Pedrone. "The path of least resistance for the market is up. That doesn't guarantee it will go up, but it does give us an edge on how to play the market from here."

As usual, we're going to do our part to make sure the Bulls win, so on Monday, I'm going to alert two stocks which I believe are set to break-out much higher within days and may continue to climb higher on positive pending news catalysts.

I'm anticipating some nice moves here because these are both stocks that I have talked about in the past, but their prices had been significantly lower due to financings that created "overhang." In other words, some of the individuals and funds that financed the companies and received stock (paper) for those financings had been been selling a majority of their shares just to reduce their initial risk in the investment- while at the same time holding on to the convertable warrants which were issued as part of the deal as their long term as investment in the firms. This type of action happens all the time in biotech and you'll hear me talking about "overhang" and how you may want to stay away from stocks that have "too much overhang" from time to time.

One of the stocks has been on my watchlist as undervalued for some time, but I warned readers not to touch it until that overhang situation was cleared up. After seeing some of the recent trading action and confirming that this is the case, I'm ready to profile and issues a  trade alert and report on that company this week. I see that they have a critical milestone coming up which should easily take shares from the stock higher.

Same thing can be said about the other stock, and perhaps to an even greater extent. That stock is ready to move much higher on multiple news items in the next two weeks. The rumors I had been reporting look like they are about to come true and with the overhang gone, this one should move much higher- providing investors who jump in at these penny levels with some nice potential returns.

Again, I will give you all the details on Monday shortly AFTER the market opens.  The reason for this is that we don't want the stocks to gap up. That only puts additional pressure on the stocks as market makers have a tendency to "walk down" the gappers, jump on board themselves, and then let the stock price ride up once they are in. That is a game I'd like to try to avoid here given the small float left in both of these shares.

I'm 95% sure that both of these stocks will run based on technical factors; i.e. it appears one of them has an unsuspecting shorter holding somehwere between 2-3 million shares that will have to be covered.

The other has only around 21 million shares in the float in total and it should return to previous $1+/share levels if it breaks some minor resistance at $.50.

Again, I will issue a trade alert for our premium subscribers only shortly after the market opens on Monday.

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