Standard Pacific

Last up is Standard Pacific ( SPF), a small-cap homebuilder that's been on a tear this year. Shares are up more than 82% in 2012, and they could be headed for triple-digits thanks to a bullish breakout in shares yesterday.

SPF had been forming a complex inverse head and shoulders pattern since the middle of May. The pattern normally indicates exhaustion among sellers, but when it's near the top of a stock's price action (as with SPF), it's a bigger signal that sellers are being completely overpowered. The breakout level for this stock was $5.50, which got taken out in yesterday's market session. That sends a buy signal out for this stock on Thursday, even if shares give back a bit in today's trading.

Lest you think that this pattern is less useful since it's so well known, think again: an academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits that would have been both statistically and economically significant." I'd recommend placing a stop just below the 50-day moving average on this stock.

To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

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