Alliance HealthCare Services

If you're looking for an under-$10 name in the health care facilities complex, then take a look at Alliance HelathCare Services ( AIQ), a national provider of outpatient diagnostic imaging services and a provider of radiation oncology services. This stock has been crushed in 2011, with shares off by around 69%. That huge drop could be about to change rapidly though if the bulls are ready to take back control if this stock.

If you take a look at the chart for Alliance HealthCare Services, you'll notice that this stock gapped down big in August from over $2.75 to a low of $1 a share. After that massive gap down in price, the stock has been trading in a sideways trading pattern between around $1.60 and $1.02 a share. The stock just started to move back above its 50-day moving average of $1.22 and it's now setting up for a big breakout if it can manage to clear some past overhead resistance at $1.36 a share. A move over that level should set this stock up to re-test its next significant resistance level at $1.64 a share at the minimum.

>>Does Technical Trading Really Work?

One could be a buyer of this stock off any weakness and anticipate the breakout. I would simply use a mental stop that's just a few percentage points below the 50-day moving average of $1.22 if you get long of weakness. You could also buy off strength and get long once it takes out $1.36 with high-volume.

Look for volume on any breakout that's tracking in close to or above its three-month average action of 275,205 shares. I would then add to any long position once the stock then takes out $1.64 with high-volume. Target a run back towards $2.25 or possibly even higher if the breakout sustains a move and close over $1.64.

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