These five technical setups are showing solid upside potential right now.
Tuesday kicked off the shortened trading week with a step backward for U.S. markets after last week's rebound. All told, the S&P 500 shed 0.68% during the session.
But as an investor, the real number you should be paying attention to from yesterday is 131. That's how many S&P components actually managed to finish higher Tuesday. In other words, even when Mr. Market is correcting, there's a not-so-small contingent of stocks that are actually working. Owning them could be the key to posting some serious gains in the second half of 2016.
To figure out which stocks look positioned to outperform in July, we're turning to the charts for a technical look at five stocks that are teetering on the edge of breakout territory this summer.
In case you're unfamiliar with technical analysis, here's the executive summary:Technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
Without further ado, here's a rundown of five technical setups that are showing solid upside potential right now.
Union Pacific 
Leading off our list is Union Pacific (UNP) . This $73 billion railroad company has been a strong performer so far in 2016, up 11.5% since the calendar flipped to January. But don't worry if you've missed that upside move in UNP so far this year, a bullish continuation pattern points to more of the same in the second half of the year. Here's how to trade it.
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Union Pacific is currently forming an ascending triangle pattern, a bullish continuation setup that's formed by horizontal resistance up above shares at $90, and uptrending support to the downside. Basically, as shares bounce in between those two technically-significant price levels, they've been getting squeezed closer and closer to a breakout through that $90 price ceiling. When that happens, we've got our buy signal.
Relative strength is the side-indicator that adds some confidence to theUnion Pacific trade right now. Our relative strength line, which measures UNP's price performance versus the broad market, has been in an uptrend since the beginning of the year, confirming that this stock is still outperforming right now. Once shares can catch a bid above $90, we've got a renewed signal that buyers are back in control of the price action here.
Helen of Troy
$3 billion consumer brands company Helen of Troy (HELE) may not have much in common with the railroad business, but the two charts sure do. Like Union Pacific, Helen of Troy is forming a textbook ascending triangle pattern. For this stock, the key breakout level to watch is resistance up at $106.
What's so special about the $106 level? It all comes down to buyers and sellers. Price patterns, like this ascending triangle setup in Helen of Troy, are a good quick way to identify what's going on in the price action, but they're not the actual reason that makes the stock tradable. Instead, the "why" comes down to basic supply and demand for HELE's shares themselves.
The $106 resistance level is a price where there has been an excess of supply of shares; in other words, it's a spot where sellers have been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above $106 so significant -- the move means that buyers are finally strong enough to absorb all of the excess supply above that price level. So if Helen of Troy can muster the strength to break above $106, this stock finally becomes a high-probability buy.
