Another potential breakout play in the biotech sector is Cytori Therapeutics (CYTX), which develops, manufactures and sells medical products and devices to enable the practice of regenerative medicine. The bears have hammered this stock so far this year, with shares off by around 34%.
This stock was hit with some major news today after the company announced it has entered into a Celution System agreement with Apollo Hospitals, one of Asia's largest private health care groups, to offer the technology initially at select cosmetic surgery centers in India. This news has spiked the stock up over 8%, but that could just be the start if the bulls really move into this name.
If you take a look at the chart for Cytori Therapeutics, you'll see that this stock has been hammered down from its April highs of $7.72 a share to a recent low of $2.32 a share. Since hitting that low in early August, the stock has jumped up to its current price of just over 3.30 a share. For the last month and half, this stock has been stuck in a range bound trading pattern between $2.90 and $3.70 a share.Market players should now watch for a breakout trade to trigger if CYTX can manage to trade above the upper end of the range at $3.50 and then $3.72 a share on heavy volume. Look for volume that's tracking in close to or above its three-month average volume of 451,900 shares. A move above those levels should set this stock up for a run back towards $4.50 or possibly even $5.40 a share, which is the 200-day moving average. Related: 8 Biotech Stocks to Watch One could be a buyer of this stock on any weakness in anticipation of the breakout and simply use a stop just below $3.04 a share in case it's not ready to go. Obviously, keep that stop much tighter if you're day trading this call. You could also just buy the stock off strength and jump in long once it takes out $3.57 to $3.72 with volume. This is another stock with a high short interest, with 18.2% of the tradable float currently sold short by the bears. If you see the breakout in the coming days or weeks, then be ready to trade this since the bears will feel pressured to do some covering.
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