My final breakout trading prospect is biopharmaceutical player Alimera Sciences (ALIM), which engages in the research, development, and commercialization of prescription ophthalmic pharmaceuticals. This stock has been red hot over the last three months, with shares up sharply by 46%.
If you look at the chart for Alimera Sciences, you'll notice that this stock recently gapped up sharply from just over $2.50 to just under $5 a share with heavy upside volume. Following that gap up, shares of ALIM have entered a consolidation pattern with the stock trending sideways between $3.75 on the downside and $5.14 on the upside. Shares of ALIM are now starting to uptrend off those recent lows and its quickly moving 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 ALIM if it manages to break out above some near-term overhead resistance levels at $4.83 to $5.14 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 232,033 shares. If that breakout triggers soon, then ALIM will set up to re-test or possibly take out its 52-week high at $5.69 a share. Any high-volume move above that level will then give ALIM a chance to tag its next major overhead resistance level at $8.77 a share.
Traders can look to buy ALIM off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4.29 or at $3.75 a share. One can also buy ALIM 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.