Five Star Quality Care

My final idea that's trending very close to triggering a near-term breakout trade is Five Star Quality Care ( FVE), which operates senior living communities, including independent living or congregate care communities, assisted living communities and skilled nursing facilities. This stock has been on fire so far in 2012, with shares up a whopping 69%.

If you look at the chart for Five Star Quality Care, you'll notice that this stock has been trending sideways for the last month and change, with shares moving between $4.45 on the downside and $5.38 on the upside. This stock is now approaching its 50-day moving average at $5.09 a share and it's quickly moving within range of breaking out above the upper-end of that sideways trading pattern. If that breakout materializes, then FVE could set up to enter new 52-week high territory, which is bullish technical price action.

Traders should now look for long-biased trades in FVE if it manages to break out above some near-term overhead resistance levels at $5.16 to $5.19 a share and then once it clears some more overhead resistance at $5.38 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 309,146 shares. If that breakout triggers soon, then FVE will set up to re-test or possibly take out its 52-week high of $5.98 a share. Any high-volume move above $5.98 could then put $6.15 to $7 a share into focus for FVE.

Traders can look to buy FVE off any weakness to anticipate that breakout and then simply use a stop that sits just below some key near-term support levels at $4.55 to $4.45 a share. Traders can also just buy FVE off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $4.80 to $4.70 a share.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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