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5 Stocks Poised for Breakouts

Boston Scientific

My final idea for a major breakout trade is Boston Scientific (BSX - Get Report), 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.


Follow Stockpickr on Twitter and become a fan on Facebook.

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 and . You can follow Pedone on Twitter at or @zerosum24.
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