5 Stocks Poised for Breakouts
An example of a recent successful breakout trade is integrated equipment services player H&E Equipment (HEES) , which I featured in Jan. 3's " 3 Stocks Spiking Higher on Unusual Volume ." At that time, shares of HEES were trending higher and starting to move back above its 50-day moving average of $15.15 a share with above-average volume. That move was quickly pushing HEES within range of triggering major breakout trade above some near-term overhead resistance levels at $15.65 to $16.21 a share.
Guess what happened? Shares of HEES triggered that breakout the following day with strong upside volume. The stock tapped an intraday high on Thursday of $17.32 a share and volume finished well above its three-month average action of 248,352 shares. I mentioned in the original piece that HEES could hit $18 to $20 if that breakout triggered soon, and I still feel those targets are achievable. This breakout has now pushed HEES outside of its recent range bound trading pattern with volume, which is bullish technical price action.
Breakout candidates are something that I tweet about on a daily basis . I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.
Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.
With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels .
One stock that's trending very close to triggering a near-term breakout trade is Zynga (ZNGA) , which develops online games designed for play on social networking sites. This stock has been hammered by the bears during the last six months, with shares off by a whopping 53%.
If you take a look at the chart for Zynga, you'll notice that this stock has been uptrending modestly strong for the last two months, with shares rising from a low of $2.09 to its recent high of $2.73 a share. During that uptrend, shares of ZNGA have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of ZNGA have recently started to bounce right off its 50-day moving average of $2.34 a share and are quickly moving within range of triggering a near-term breakout trade.