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TheStreet Open House

5 Stocks Poised for Breakouts

Best Buy

One electronics retailer that's starting to trend within range of triggering a near-term breakout trade is Best Buy (BBY), which operates as an e-commerce and physical retailer of consumer electronics in the U.S., Europe, Canada and China. This stock has been hit hard by the sellers so far in 2014, with shares down by 33%.

>>5 Big Charts to Trade for Gains

If you take a look at glance at the chart for Best Buy, you'll notice that this stock recently gapped down sharply from $37.85 to under $26 with strong downside volume. Following that move, shares of BBY continued to slide lower as the stock went on to tag a new low of $22.15 a share. Shares of BBY found a bottom at $22.15 and the stock has now reversed its direction and entered an uptrend, with shares tagging a recent high of $28.20 a share. Shares of BBY are now starting to spike higher and move within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in BBY if it manages to break out above some near-term overhead resistance at $28.20 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 10.26 million shares. If that breakout begins soon, then BBY will set up to re-fill some of its previous gap-down-day zone from January that started at $37.85 a share.

Traders can look to buy BBY off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $24 a share. One can also buy BBY off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

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