Health care stocks rank among the biggest winners of the current bull market, and one subsector that has shown significant outperformance in the past six months is medical equipment makers.

Since many of the stocks in this group have already made big runs, I am on the lookout for fresh chart pattern breakouts.

Aesthetic and medical device maker Cynosure (NASDAQ: CYNO) fits that bill. The company makes devices to treat various skin and vascular conditions, including tattoo removal and cellulite treatments.

On the charts, Cynosure has been trading in a very wide long-term trading range between $21 and $31.50, in round numbers. 

On the last short-term leg up within the pattern, shares stalled at the upper border, but unlike previous attempts, they only pulled back by a small margin. This behavior leans bullish as it shows the bears could not drive the stock back down as they had done before.

#-ad_banner-#​Earlier this month, CYNO poked its head above the upper border of the range and spent a few more days rallying, but then once again pulled back. It found support at the old range top. 

What was once considered to be expensive was now considered to be cheap. Or, to put it in more technical jargon, resistance had become support. That is the essence of a breakout. 

With Thursday’s rally the corrective dip ended and the test of the breakout was successful. The path of least resistance is now to the upside.

Chart watchers forecast possible upside targets by projecting the height of the pattern from which the stock escaped up from the breakout point. 

With a $10.50 range height added to the upper border at $31.50, we can look for a move to $42 over the next five or so months.

That is a big move, so let’s put it into context. 

Looking at the long-term chart, Cynosure peaked in 2007 at $45. Therefore, a rally off the current breakout could take it close to that level. That it has been there before may actually provide comfort for some traders as they enjoy the ride.

There’s one more reason to be bullish on CYNO. It scored a 191 out of 200 on a proprietary indicator developed to spot stocks on the verge of a breakout. Stocks with similar scores have gone on to return double- and triple-digit gains in just weeks or months. 

Here are some of the stocks this indicator pegged before a breakout:

As you can see, they don’t have anything in common. They are from different industries, range from small cap to large, well-known to relatively obscure. They one thing they do have in common with each other — and with CYNO — was that this breakout indicator pegged them as “buys.”

To find out more about this indicator and get the name of a stock signaling “buy” now, follow this link. 

Recommended Trade Setup:

— Buy CYNO at the market price
— Set stop-loss at $30.50
— Set initial price target at $40 for a potential 20% gain in five months 

This article was originally published on ProfitableTrading.com: Chart Says This Medical Equipment Stock is Poised for a Big Rally