One more stock that's nearing a major breakout trade is StemCells (STEM). This company is focused on cellular medicine, or the use of stem and progenitor cells as the basis for therapeutics and therapies, and enabling technologies for stem cell research, or the use of cells and related technologies to enable stem cell-based research and drug discovery and development. This stock is off to a monster start in 2012, with shares up a whopping 150% so far.
If you look at the chart for StemCells, you'll notice that this stock has uptrending ridiculously strong for the past four months, with shares soaring from a low of 60 cents to its recent high of $2.67 a share. During that uptrend, shares of STEM have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of STEM have now started to trend sideways during the last month, with shares moving between $1.80 and $2.28 a share. A high-volume above the upper-end of that sideways trading pattern will now trigger a major breakout trade for STEM.
Traders should now look for long-biased trades in STEM once it manages to clear some near-term overhead resistance levels at $2.27 to $2.28 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 2.8 million shares. If that breakout triggers soon, then STEM will setup to re-test and possibly take out its next major overhead resistance level at $2.67 a share. If $2.67 was to get taken out with volume, then STEM will have an excellent chance of tagging $4 a share very soon.One could look to buy STEM off any weakness, and simply use a stop that sits right around its 50-day moving average of $1.85 a share. You could also just buy off strength once STEM clears $2.27 to $2.28 a share with high volume, and then simply use a stop at around $2 a share. 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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