One under-$10 name that looks ready to trade much higher is Orexigen Therapeutics (OREX), a biopharmaceutical company focused on the development of pharmaceutical product candidates for the treatment of obesity. The bears have beaten down this stock in 2011, with shares off by over 72%.
If you take a look at the chart for Orexigen Therapeutics, you'll see that this stock recently gapped up from around $1.40 to $2.68 a share on monster volume. Following that gap up in price, the stock has now dropped back down toward $2.15 a share. What I like about the setup here for OREX, is that when a stocks gaps up like this, sells off and then challenges the gap high again, it often breaks out. If you want to see an example of this, then look at the chart for Transcept Pharmaceuticals (TSPT), which recently put in a similar pattern.
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