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5 Stocks Setting Up to Break Out

Bonanza Creek Energy

A stock in the oil and gas complex that's within range of a major breakout trade is Bonanza Creek Energy (BCEI - Get Report), an oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the U.S. This stock is off to a monster start in 2012, with shares up over 70%.

If you look at the chart for Bonanza Creek Energy, you'll notice that this stock has been uptrending strong for the past few months, with shares moving from $12.39 to its current price of around $21.50 a share. During that uptrend, shares of BCEI have been consistently making higher lows and higher highs, which is bullish price action. That move has now pushed BCEI within range of triggering a near-term breakout trade.

Market players should now look for long biased trades in BCEI if this stock can manage to take out some overhead resistance at $22.25 with high-volume. Look for a sustained high-volume move and close above that level that's near or well above its three-month average action of 276,252 shares. If we get that action soon, then this stock has a great chance of tagging $25 a share or higher. Keep in mind, that a move over $22.25 will mean BCEI is trading at a new all-time high, which is technically bullish price action.

Traders should consider getting long this stock as long as it's trending above $22.25 with strong upside volume flows. I would consider it even more bullish if BCEI can start to close over that key breakout level with high-volume. Some near-term support can be found at around $20.33 in case you're looking for an area to watch if the stock pulls back before breaking out. I would avoid long trades in BCEI if the breakout never hits or if it moves back below $20.33 with volume.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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BCEI $6.21 14.36%
DNDN $0.06 -6.02%
HZNP $20.21 -4.26%
TRIP $67.24 1.33%
VVUS $1.75 2.94%


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