Neuralstem

My final breakout trading prospect is Neuralstem ( CUR), which is engaged in the development and commercialization of treatments for central nervous system disease based on transplanting human neural stem cells and the use of small molecule drugs. This stock has been a monster for the bulls so far in 2013, with shares up sharply by 63%.

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If you look at the chart for Neuralstem, you'll notice that this stock has been uptrending very strong for the last six months, with shares soaring higher from its low of $1 to its high of $1.79 a share. During that move, shares of CUR have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of CUR have recently pulled back to its 50-day moving average at $1.59 a share, and the stock is starting to bounce sharply higher off that level. That move is quickly pushing CUR within range of triggering a big breakout trade.

Traders should now look for long-biased trades in CUR if it manages to break out above some near-term overhead resistance levels at $1.75 to $1.79 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 action of 468,962 shares. If that breakout triggers soon, then CUR will set up to re-test or possibly take out its 52-week high at $1.96 a share. Any high-volume move above $1.96 will then give CUR a chance to tag $2.50 to $3 a share.

Traders can look to buy CUR off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $1.59 a share, or below more support at $1.50 a share. One could also buy CUR off strength once it clears those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

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

-- Written by Roberto Pedone in Delafield, Wis.

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

Roberto Pedone, based out of Delafield, Wis., 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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