With the market in a continuing retracement from the highs and testing support again, it’s been a mediocre couple of weeks for breakout stocks, that is unless you’re talking about anything related to metals and oils, both of which continue to march higher. 

Over the past 2 weeks (the period of April 1st through April 15th), I have tracked a total of 32 breakouts, with 21 finishing the period with a gain, 3 finishing flat and 8 down.

The biggest winners came from the industrial arena with gains of 11% in both USG Corp (USG), the large distributor of building materials & Gehl Co. (GEHL), the heavy equipment manufacturer.  Both stocks are consolidating in a healthy manner after the initial breakout.

The biggest loss in the period belonged to EZ Em Inc (EZEM), which broke out from a base on the day it was to report earnings, only to reverse sharply the next morning after reporting less than stellar earnings after the bell.  The stock is currently 21% below the breakout point.  Yet another example of why it’s a good idea to avoid holding small to mid cap stocks through earnings.  You may hit a home run once in awhile, but ultimately it’s just not worth the added risk in my opinion.

Let’s have a look at the top rated breakouts in the period.  As always, you may click here to see a larger image of a screenshot of the database.

The top rated breakout in the period was Focus Media Holdings (FMCN), which happens to be a stock I’m currently tracking here at the blog.  You’ll notice that the rest of the list is a good representation of the overall trend in breakouts over the period with a few top rated oil breakouts in Arena Resources (ARD), W&T Offshore (WTI) and Superior Well Services (SWSI); a gold breakout in Rio Tinto (RTP) and some industrials joining the party with top rated breakouts in Airgas (ARG) and Sterling Construction (STRL). 

** Both SWSI and STRL were mentioned in a "Hot Stocks" report several days ago.  If you missed that report, you can find it here.

Let’s have a look at a few charts real quick. 

You could say that the first breakout occurred from a double bottom base just above 200 long before it broke to a new all time high, but you could have initiated a position on a breakout to a new all time high as well.  Before today’s move, the stock pulled back to near the breakout point and offered a decent entry, but I don’t like the volume behind today’s move.  It’s suspicious. 

I have Arena as one of the highest rated oil stocks and it broke out nicely last week.  While the base is a little on the steep side, I like the tight price action and volume levels continue to look really good.  As oil approaches resistance levels up around 70, the chances of some retracement are good and might allow for some great entry points in oil in the next week or two.  This is one to keep an eye on.

Technically, ARG cleared my first breakout point, but it never confirmed the breakout by following the move to new highs with additional surges in price and volume.. So it continues to digest the big gap up in mid January in a healthy manner.  I’ll be readjusting my pivot point in the database soon, as it appears the stock will form some sort of flat base here before attempting another breakout move.  Keep an eye on that support level of the 50 day moving average.

CRESY is a really interesting opportunity in the global real estate arena.  Cresud Sacif is a leading agricultural Argentinian company that is considered a REIT due to its large holdings of farmland.  After the collapse of its currency (97′ I believe?), the country is quickly getting back on its feet.  Given the trend of more investors putting money into these emerging markets, property prices will surely continue to rise in certain overseas markets.  It used to be that retired (so called expats bought real estate and lived overseas), but with improvements in technology and more retirees and young people alike priced out of US real estate markets, this trend will only continue, improving the economies of these emerging markets and raising land values (check out the Gary Scott article about living and working overseas if you haven’t already.. interesting insight)  CRESY is one of the few ways that I know of to play the global real estate boom through the US stock market.  If anyone has some other ways to play this feel free to comment below.

The chart of CRESY provides a good example of how stocks can sometimes offer several opportunities to initate a position.  I always look for the first breakout point above resistance levels of both the 50 day and 200 day moving averages.  Once the first consolidation takes place above these levels I can set my first breakout point (in this case around the middle of February).  While the 2nd opportunity occurred on a break above the highs of mid September ’05, I would not have nibbled here.  The stock had come too far too fast.  A better opportunity arose after the stock consolidated those gains and returned to near the first breakout point around 12.75.  Notice it retested resistance around 14.50 and dropped back to near 13 again before making another significant move higher.  Well, its retracing that move too and coming in to the 50 day moving average, potentially offering another area to pick up shares provided it can find support there.  Pick your entry points carefully.