5 Breakout Stocks: Must-See Charts

Gastar Exploration

My final idea that's trending very close to triggering a near-term breakout trade is Gastar Exploration (GST), which is an independent energy company, engaged in the exploration, development and production of natural gas and oil in the U.S. This stock been hammered by the bears so far in 2012, with shares down by a whopping 62%.

If you look at the chart for Gastar Exploration, you'll see that this stock has recently started to trend back above its 50-day moving average of 97 cents per share with decent upside volume flows. Volume on Friday registered 1.15 million shares traded versus its three month average action of 479,365 shares. The stock closed up 11% to $1.19 a share. That spike is quickly pushing shares of GST within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in GST once it manages to take out some near-term overhead resistance levels at $1.12 to $1.25 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 volume of 479,365 shares. If that breakout triggers soon, then GST will set up to re-test or possibly take out its next major overhead resistance levels at $1.39 to $1.40 a share. Any high-volume move above those levels will then put $1.78 to its 200-day at $1.82 into focus for shares of GST.

One could look to buy GST off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day at 97 cents per share. Traders can also just buy off strength once GST takes out those breakout levels with volume and then simply use a stop that also sits near its 50-day at 97 cents per 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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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 technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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