My final breakout trading prospect is biopharmaceutical player Acadia Pharmaceuticals (ACAD), which is in the business of development and commercialization of small molecule drugs for the treatment of central nervous system disorders. This stock has been firing on all cylinders so far in 2013, with shares up a monster amount of 423%.
If you look at the chart for Acadia Pharmaceuticals, youll notice that this stock has been trending sideways for the last two months, with shares moving between $20.13 on the downside and $25.77 on the upside. Over the last few weeks, shares of ACAD have started to uptrend and move back above its 50-day moving average of $22.98 a share. That move is quickly pushing shares of ACAD within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern.
Traders should now look for long-biased trades in ACAD if it manages to break out above some near-term overhead resistance levels at $25 to $25.77 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 2.44 million shares. If that breakout triggers soon, then ACAD will set up to re-test or possibly take out its next major overhead resistance levels at $28 to its 52-week high at $29.73 a share. Any high-volume move above those levels will then give ACAD a chance to trend north of $30 a share.
Traders can look to buy ACAD off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $22.98 a share, or near more support at $22 a share. One can also buy ACAD off strength once it starts to take out 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.