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TheStreet Open House

5 Stocks Poised for Breakouts

Fuel Systems Solutions

Another alternative energy player that's quickly moving within range of triggering a major breakout trade is Fuel Systems Solutions ( FSYS), which designs, manufactures and supplies alternative fuel components and systems for transportation and industrial applications. This stock has been hit hard by the sellers during the last three months, with shares off sharply by 28%.

>>3 Stocks Spiking on Big Volume

If you look at the chart for Fuel Systems Solutions, you'll notice that this stock gapped down big a few weeks ago from around $17 to below $14 a share with heavy downside volume. Following that plunge, shares of FSYS have started to consolidate and base with the stock forming a double bottom at $13.06 to $13.10 a share. Shares of FSYS have now started to spike higher off those support levels and it's quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in FSYS if it manages to break out above last Friday's high of $13.81 a share, and then once it takes out some more near-term overhead resistance levels at $14.01 to $14.09 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 139,228 shares. If that breakout hits soon, then FSYS will set up to re-fill some of its previous gap down zone that started near $17 a share. This stock could easily tag $16 to $17, or even trade up $18 or $19 a share if that gap gets filled with strong upside volume flows.

Traders can look to buy FSYS off any weakness to anticipate that breakout and simply use a stop that sits right below its 52-week low at $13.06 a share. One can also buy FSYS off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

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