My final breakout trading idea is
SCTY), which is engaged in the design, sales, engineering, installation, monitoring, maintenance and financing of solar energy systems to residential and commercial customers, and sale of electricity generated by solar energy systems to customers. This stock has been red hot so far in 2013, with shares up a whopping 209%.
If you look at the chart for SolarCity, you'll notice that this stock has been trending sideways for the last month, with shares moving between $32.66 on the downside and $39.07 a share on the upside. Shares of SCTY have recently started to bounce higher off its 50-day moving average at $34.53 a share and it's now quickly moving within range of triggering a near-term breakout trade. That trade will hit if SCTY manages to take out the upper end of its recent sideways trading chart pattern.
>>5 Short-Squeeze Stocks Poised to Pop
Traders should now look for long-biased trades in SCTY if it manages to break out above some near-term overhead resistance levels at $38.88 to $39.07 a share and then once it clears more resistance levels at $39.59 to $40 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 action of 2.15 million shares. If that breakout triggers soon, then SCTY will set up to re-test or possibly take out its next major overhead resistance levels at $45 to $50 a share. Any high-volume move above those levels will then put its 52-week high at $52.77 into range for shares of SCTY.
Traders can look to buy SCTY off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $34.53 a share or right below some more key near-term support at $32.66 a share. One could also buy SCTY 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.
This stock is a favorite target of the short-sellers, since the current short interest as a percentage of the float for SCTY is extremely high at 18.3%. The bears have also been increasing their bets from the last reporting period by 8%, or by about 334,000 shares. If the bears are caught pressing their bets into a future breakout, then SCTY could easily see a sharp short-squeeze that sends the stock sharply higher from current levels.
To see more breakout candidates, check out the
Breakout Stocks of the Week
portfolio on Stockpickr.
-- Written by Roberto Pedone in Madison, Wis.
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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 CNBC.com
. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.
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