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TheStreet Open House

5 Breakout Stocks to Eye for a Buy

Changyou.com

One stock that's very close to triggering a breakout trade is Changyou.com (CYOU). This is online game developer and operator in the People's Republic of China. This stock is off to a slow start in 2012 with shares up just a bit over 2%.

If you take a look at the chart for Changyou.com, you'll notice that this stock has been stuck in a big downtrend for the last six months. During that timeframe, shares of CYOU have grinding lower making mostly lower highs and lower lows, which is bearish price action. That said, now CYOU is starting to find some buying support at around $20.71 to $22.25 a share, and some decent upside volume days are also starting to show up.

Market players should now watch for CYOU to sustain a high-volume move and close back above $23.57 and $24 a share. A high-volume move or close above those levels will trigger a breakout trade. Watch for volume on any future breakout that's near or above its three-month average volume of 311,918 shares. If we get that action, then look for CYOU to spike big back towards $27 a share, or possibly higher.

Keep in mind that CYOU is scheduled to report earnings on Feb. 6 after the market close. If the breakout I mentioned above hits before their earnings date, then look for this stock to spike nice as we head into their report.

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