  We present ab initio calculations of the evolution of anisotropic
magnetoresistance (AMR) in Ni nanocontacts from the ballistic to the tunnel
regime. We find an extraordinary enhancement of AMR, compared to bulk, in two
scenarios. In systems without localized states, like chemically pure break
junctions, large AMR only occurs if the orbital polarization of the current is
large, regardless of the anisotropy of the density of states. In systems that
display localized states close to the Fermi energy, like a single electron
transistor with ferromagnetic electrodes, large AMR is related to the variation
of the Fermi energy as a function of the magnetization direction.
