Alon USA Energy
Another stock that's closing in on a major breakout trade is
Alon USA Energy
(ALJ - Get Report)
, which is an independent refiner and marketer of petroleum products operating primarily in the South Central, Southwestern and Western regions of the United States. This stock has been off to a blazing hot start in 2012, with shares up over 60%.
If you take a look at the chart for Alon USA Energy, you'll see that this stock has been trending sideways for the last two months, with shares moving between $12.06 on the downside and $14.69 on the upside. Shares of ALJ have just started to move back above its 50-day moving average of $13.61 and it's quickly moving within range of triggering a major breakout trade above the upper-end of its sideways chart pattern.
Market players should now look for long-biased trades in ALJ once it manages to break out above some near-term overhead resistance at $14.69 a share with high volume. Look for a sustained move or close above $14.69 with volume that registers near or above its three-month average action of 205,928 shares. If that breakout triggers soon, then ALJ will push into new 52-week high territory and it will set up to re-test or possibly take out its 2011 high of $15.21 a share. Any high-volume move above $15.21 could push ALJ towards $20 a share in the future.
Traders can look to buy ALJ off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $13.61 a share. One could also buy off strength once ALJ triggers that breakout above $14.69 to $15.21 a share and then simply use a stop just below $14 a share.