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5 Stocks Poised for Breakouts

Stocks in this article: TARDNMTGUATVLBSX

Boston Scientific

My final idea for a major breakout trade is Boston Scientific (BSX), which is a developer, manufacturer and marketer of medical devices that are used in a range of interventional medical specialties. This stock is off to a hot start in 2013, with shares up over 36%.

If you look at the chart for Boston Scientific, you'll notice that this stock has been trending sideways in a consolidation pattern for the last two months, with shares moving between $7.17 on the downside and around $7.70 on the upside. Shares of BSX recently started to bounce off its 50-day moving average of $7.34 a share with massive upside volume. Volume over the past two trading sessions has registered over 40 million shares, which is dramatically higher than its three-month average action of 21.65 million shares. Shares of BSX have also just started to take out some near-term overhead resistance levels at $7.65 to $7.73 a share. That move is quickly pushing shares of BSX within range of triggering a major breakout trade.

Traders should now look for long-biased trades in BSX if it manages to break out above some past overhead resistance levels at $7.91 to $7.96 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 21.65 million shares. If that breakout triggers soon, then BSX will set up to re-test or possibly take out its next major past resistance levels at $9.50 to $11.50 a share. Any high-volume move those levels will then put $13.50 to $14 into range for shares of BSX.

Traders can look to buy BSX off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $7.34 a share or right around some key near-term support levels at $7.24 to $7.17 a share. One could also buy BSX off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below its 50-day moving average of $7.34 a 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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