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TheStreet Open House

5 Stocks Poised for Breakouts

One could look to buy TC as long as it's trending above its 50-day moving average of $2.84 with strong upside volume flows. I would simply use a stop that sits right below $2.50 a share if you get long TC.

Opexa Therapeutics

Another stock in the biotechnology and drugs complex that's trading very close to triggering a major breakout trade is Opexa Therapeutics (OPXA), which is engaged in developing personalized cellular therapies with the potential to treat major illnesses, including multiple sclerosis. This stock has been starting to perk up in the last six months, with shares up around 27%.

If you look at the chart for Opexa Therapeutics, you'll see that this stock has been uptrending strong for the last two months and change, with shares soaring from 42 cents per share to its recent high of 87 cents per share. During that uptrend, shares of OPXA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed OPXA within range of triggering a major breakout trade.

Traders should now look for long-biased trades in OPXA if it can manage to break out above some near-term overhead resistance levels at 80 to 87 cents per share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 113,175 shares. If that breakout triggers soon, then OPXA will setup to re-test or possibly take out its next significant overhead resistance levels at $1.15 to $1.28 a share. Any high-volume move above those levels will give OPXA an excellent chance to tag $1.50 to $1.75 a share.

One could look to buy OPXA off weakness as long as it's trending above its 50-day moving average of 64 cents per share with strong upside volume flows. One could also just buy off strength once OPXA clears 80 to 87 cents per share and then simply use a stop that sits just below its 200-day at 68 cents per share, or even a bit higher near 75 cents per share.

Asia Entertainment & Resorts

One more stock that's trading very close to triggering a near-term breakout trade is Asia Entertainment & Resorts (AERL), which engages in the promotion of VIP gaming rooms in Macau, the People's Republic of China. This stock has been hit hard by the bears so far in 2012, with shares down by over 40%.

If you look at the chart for Asia Entertainment & Resorts, you'll notice that this stock has been downtrending for the past two months, with shares falling from $4.45 to its recent low of $2.83 a share. During that downtrend, shares of AERL have been mostly making lower highs and lower lows, which is bearish technical price action. That said, this stock has started to come off that low of $2.83 and its setting up to take out its 50-day moving average of $3.37 a share, and possibly reverse its bearish downtrend.

Traders should now look for long-biased trades in AERL once it manages to clear some near-term overhead resistance at $3.13 to $3.37 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 135,455 shares. If that breakout triggers soon, then AERL will have a great chance to re-test or possibly take out its next significant overhead resistance levels at $3.80 to $4.45 a share. Any high-volume move above those levels will then give AERL a chance to tag $4.83 to $5.52 a share, or possible even $6 a share.

One could look to buy AERL off any weakness to anticipate that breakout, and simply use a stop that sits right below some near-term support levels at $3 to $2.83 a share. A better strategy might be to buy AERL once it clears its 50-day at $3.37 with strong volume, and then use a stop just below $3.13 to $3 a share. I would add to either position once AERL clears $3.80 to $4.83 a share 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 Beconequity.com and maintains the website Maddmoney.net, 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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