Another stock that's moving within range of triggering a near-term breakout trade is U.S. Silica (SLCA - Get Report), a domestic producer of commercial silica, a specialized mineral that is a critical input into a variety of attractive end markets. This stock has been a favorite play for the bulls during the last three months, with shares up a whopping 40%.
If you look at the chart for U.S. Silica, you'll see that this stock has been downtrending for the last two months, with shares dropping from a high of $15.22 to its recent low of $12.37 a share. During that slide lower, shares of SLCA have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to spike higher today and move back above its 50-day moving average of $13.29 a share. The spike is quickly pushing SCLA within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in U.S Silica if it can manage to break out above some near-term overhead resistance levels at $14 to $14.99 a share, and then above more resistance at $15.22 a share with high volume. Look for a sustained move or close above those level with volume that hits near or above its three-month average action of 348,395 shares. If that breakout triggers soon, then SLCA could make an explosive move back towards its next major overhead resistance level at $18.82 a share.Traders can look to buy SLCA off any weakness as long as it's trending within range of its 50-day at $13.30 a share. One could use a stop just below today's low of $12.74 a share. One can also buy off strength once SLCA starts to take out those breakout levels with volume and then simply use a stop around $14 to $13.30 a share. I would add to either position once SLCA takes out $15.22 with heavy volume.