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.