This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Stocks Poised for Breakouts

Rackspace Hosting

My final breakout trading idea today is Rackspace Hosting ( RAX), which is a provider of cloud computing services, managing Web-based IT systems for small and medium-sized businesses as well as large enterprises. This stock has been destroyed by the sellers so far in 2013, with shares off by a whopping 51.8%.

>>5 Stocks Insiders Love Right Now

If you look at the chart for Rackspace Hosting, you'll notice that this stock has been downtrending badly for the last six months, with shares plunging lower from its high of near $80 to its recent low of $33.91 a share. During that downtrend, shares of RAX have mostly been making lower highs and lower lows, which is bearish technical price action. That said, shares of RAX recently formed a double bottom at $33.91 to $34 a share. Shares of RAX have now started to rebound off that double bottom area and the stock is quickly moving within range of triggering a near-term breakout trade above a key descending trendline.

Traders should now look for long-biased trades in RAX if it manages to break out above some near-term overhead resistance levels at $38.12 to $39.90 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 2.31 million shares. If that breakout triggers soon, then RAX will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $41.37 to $43.16 a share. Any high-volume move above those levels will then give RAX a chance to re-fill its previous gap down zone from May that started at $52.45 a share.

Traders can look to buy RAX off any weakness to anticipate that breakout and simply use a stop that sits right below its double bottom area at $34 to $33.91 a share. One could also buy RAX off strength once it clears those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point. I would add to either position once RX takes out $43.16 a share with heavy upside volume.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Madison, Wis.


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 Madison, Wis., 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.
6 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
ACTG $5.67 0.00%
PBYI $75.80 0.00%
PKD $2.69 0.00%
RAX $27.63 0.00%
SGYP $6.17 0.00%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs