3 Stocks Ready for a Breakout

08/28/2012 10:00 am EST

Focus: STOCKS

Joey Fundora reviews three names whose charts appear to be begging to shoot higher.

I have a couple trader friends, who shall remain nameless, who have been looking for a market top for the past few weeks. However, I have found myself long to the hilt during this time, and it has been paying off. Maybe the market is due for a pullback, but I keep finding long setups, and will continue to trade them until the market tells me to stop.

Even while the indexes were pulling back a little last week, there were several individual stocks trading very well. This is typically a trait of a healthy market, and with all the indexes sporting rising 20-, 50-, and 200-day moving averages, it appears that there is still potential for higher prices.

Here are a few stocks I am adding to my watchlist for this week.

I thought Affymax (AFFY) was ready to run last week, but it stalled out with the market's weakness. However, it did not suffer through any real weakness, and has traded in two very tight low-volume candles. Any move above these could signal a breakout attempt. A drop below them would mean it needs more time, or a failure.

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Next: Life Technologies

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Life Technologies (LIFE) is another one that made it onto my radar for the week. It has spent most of the year consolidating a breakout and only recently started to turn higher. It is starting to form higher lows, and is currently forming a bull flag after clearing some resistance. I believe that if it clears the flag, it will make a run at this year's highs.

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Huntington Ingals Industries (HII) is also worth watching, as it trades in a very tight range. Recent IPOs are always intriguing as there is no long-term resistance holding them back.

HII has stalled out near $41.50 to $42 on a few occasions, as recently as a few weeks ago. However, the pullback from these highs has been orderly, and HII remains above an upward sloping 50-day moving average. If HII can clear $40.50-ish, it may challenge for new all-time highs soon thereafter.

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As with all trading ideas, please perform your own due diligence, check earnings, and make sure if fits your trading plan.

Joey Fundora is a trader and blogger at DowntownTrader.com.

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