This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Stocks Poised for Breakouts

Merge Healthcare

One stock that's trading within range of a major breakout trade is Merge Healthcare (MRGE), which develops software solutions that facilitate the sharing of images to create an electronic healthcare experience for patients and physicians. This stock has been hit hard by the sellers, with shares off by over 40% so far in 2012.

If you take a look at the chart for Merge Healthcare, you'll notice that this stock was taken to the woodshed by the bears, after it fell from its March high of $6.65 to a recent low of $2.20 a share. During that sharp move lower, shares of Merge Healthcare consistently made lower highs and lower lows, which is bearish technical price action. That said, this stock has started to form a bottoming process during the last two months at around $2.20 to $2.36 a share. This stock is also now moving within range of triggering a near-term breakout trade.

>>3 Health Care Stocks to Trade (or Not)

Traders should look for long-biased traders in MRGE if it can manage to trigger a breakout above some near-term overhead resistance at $2.95 a share with high volume. Look for a sustained move or close above $2.95 with volume that registers near or above its three-month average action of 1 million shares. If we get that action soon, then MRGE could easily re-fill a previous gap-down from May and trade up toward $4 to $5 a share.

One could be a buyer of MRGE off weakness and anticipate the breakout with a stop at around $2.50 a share. I think a better idea is to buy MRGE off strength and get long once it takes out $2.95 with volume. The best part about getting long above $2.95, is that it will also get you long above its 50-day moving average at $2.90 a share. I would also look to press this trade above $3.50 a share, since that's the daily high from the gap-down day in May.

Keep in mind that MRGE sports a pretty decent short interest. The current short interest as a percentage of the float for MRGE is 10.4%. If we get that breakout soon, then we could easily see a sizeable short squeeze develop.
2 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MRGE $0.00 0.00%
KTOS $3.06 -1.92%
LNG $26.05 5.25%
PSDV $2.86 1.42%
SODA $12.77 6.24%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs