My final breakout trading prospect is development-stage biopharmaceutical player Aratana Therapeutics (PETX), which is engaged in licensing, development and commercialization of prescription medicines for pets. This stock is off to a monster start so far in 2013, with shares up a whopping 143%.
If you look at the chart for Aratana Therapeutics, you'll notice that this stock has been downtrending badly for the last month, with shares dropping from its all-time high of $29.32 to its recent low of $18.20 a share. During that downtrend, shares of PETX have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of PETX have recently formed a double bottom chart pattern at $18.33 to $18.20 a share. This stock has now started to bounce off that bottom, and it's quickly moving within range of triggering a near-term breakout trade.Traders should now look for long-biased trades in PETX if it manages to break out above some near-term overhead resistance levels at $21.71 to $22 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 91,260 shares. If that breakout triggers soon, then PETX will set up to re-test or possibly take out its next major overhead resistance levels at $25.50 to $28 a share. Any high-volume move above those levels will then give PETX a chance to re-test or take out its all-time high at $29.32 a share. Traders can look to buy PETX off any weakness to anticipate that breakout and simply use a stop that sits right below that double bottom zone at $18.33 to $18.20 a share. One could also buy PETX 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. To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr. -- Written by Roberto Pedone in Delafield, Wis.
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