3 Stocks Poised for Breakouts

WINDERMERE, Fla. (Stockpickr) -- U.S. stocks are rallying big for the second day in row off news of a ceasefire in Libya and due to a joint currency intervention by a number of G-7 industrialized nations.

The Bank of Japan, Germany's Bundesbank, the Bank of England, the Italian Central Bank and the Bank of France have all jumped into the currency markets to sell yen against the dollar and euro. The yen had hit a historic high of close to 76 against the U.S. dollar this week. This move is being done to stop the yen from rising, which complicates Japan's efforts to deal with the destruction caused by last week's devastating earthquake and the unfolding nuclear crisis. The last time the G-7 did a coordinated currency intervention similar to this move was over a decade ago.

The stability of the yen is very important for Japan since many Japanese companies rely on exports and a lower yen is vital for these businesses to weather the recovery from the earthquake and tsunami. The coordinated intervention is also helpful because it opens the door for the BOJ to intervene on its own, without having to worry about being criticized for starting a currency war in the future.

For now, stock traders view the move as a risk-trade-back-on event that will flood global markets with huge amounts of liquidity that make stocks look attractive vs. other assets. The Dow Jones Industrial Average is higher by 102 points to 11,876 while the S&P 500 is up by 8 points to 1,282. The tech-heavy Nasdaq has risen 17 points to 2,653.

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The massive rebuilding effort that's set to take place in Japan has started to move the materials and energy sectors. The thesis here is pretty simple: As Japan moves out of the cleanup phase and into the rebuild phase, it's going to need materials such as wood, steel, silver and copper. You can't rebuild anything without using energy. Japan is going to create huge demand for energy assets like oil, coal and natural gas. This will surly eat up global supply and potentially push up prices.

The materials and energy sectors of the market are where I am finding new breakout stock candidates. A breakout occurs when a stock makes a move through a significant level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street players love to see an upside breakout because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. An upside breakout can also take a stock to new highs, which will generate a lot of interest as the stock shows up on sophisticated software that scans for this type of action.

Here's a look at a number of stocks, including some materials and energy stocks that look poised to break out and trade significantly higher from current levels.