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TheStreet Open House

5 Stocks Poised for Breakouts

Stocks in this article: AXUZGNXIDIXSPPIREETGB

Zogenix

Another stock that's setting up for a major breakout trade is Zogenix (ZGNX), a pharmaceutical company engaged in commercializing and developing products for the treatment of central nervous system disorders and pain. This stock is up modestly so far on the year, with shares up around 10%.

If you take a look at the chart for Zogenix, you'll notice that this stock has been uptrending very strong for the last three months, with shares consistently making higher lows and higher highs, which is bullish technical price action. That uptrend has taken ZGNX from a May low of $1.55 to its recent high of $2.60 a share. That bullish price action has now pushed ZGNXZ within range of triggering a major breakout trade.

>>5 Stocks With Big Insider Buying

Market players should now look for long-biased trades in ZGNX if this stock can manage to take out some near-term overhead resistance levels at $2.54 to $2.60 a share with high volume. Look for a sustained move or close above those levels with volume that tracks in close to or above its three-month average action of 355,103 shares. If that breakout triggers soon, then ZGNX will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $2.90 to $3.04 a share. Any high-volume move above $3.04 will setup ZGNX to possibly hit $4 to $5 a share.

One can look to buy ZGNX off any weakness and anticipate that breakout, and simply use a stop around its 50-day moving average of $2.25 a share. One could also buy off strength once ZGNX clears $2.54 to $2.60 with heavy upside volume, and then simply use a stop at around $2.40 to $2.30 a share. I would add to either position once ZGNX takes out $3.04 with strong volume.

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