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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Health Care Stocks Setting Up to Break Out

Brookdale Senior Living

The last inverse head and shoulders setup to watch is Brookdale Senior Living (BKD), a small-cap senior and assisted living community operator. BKD is a more textbook inverse head-and-shoulders pattern because it's shaping up as a reversal after a selloff. The breakout above the neckline happened on Friday too, but it's still close enough to that price level to justify buying here.

Lest you think that the head and shoulders is too well known to be worth trading, the research suggests otherwise: a recent academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant."

If you decide to be a buyer here, I'd recommend putting a protective stop just below the right shoulder at $16.50.

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