One name under-$10 name in the biotechnology and drugs complex that's worth watching here is Idenix Pharmaceuticals (IDIX), which is engaged in the discovery and development of drugs for the treatment of human viral diseases with operations in the U.S. and Europe. This stock has been blazing a trail to the upside in 2011, with shares up over 40%.
If you take a look at the chart for Idenix Pharmaceuticals, you'll notice that this stock plunged from its July high of $7.03 to a recent low of 4.06 a share. After tagging that low, the stock then ran up to $6.20 and formed a double top. Shares subsequently plunged back down to $4.30. Since hitting $4.30 in October, the stock has started to form a more bullish pattern with shares making higher highs and higher lows. The stock now sets up for a major breakout if it can sustain a move and close above some near-term overhead resistance levels.
Market players should watch for IDIX to clear $7.16 to $7.60 (Thursday's high) on high volume. Traders should look for volume that's tracking in close to or above its three-month average action of 646,500 shares. Volume on Thursday hit about 1.2 million shares, with the stock finishing up 2.7% to $7.18. That means the first breakout level has hit and now all this stock needs to do is close over $7.60 with solid volume.You could be a buyer of this stock off any noticeable weakness and simply use a mental stop near Thursday's low of $6.96. If you want to buy off strength, then buy some shares once it takes out $7.60 on high volume. A close over $7.60 should set this stock up to trend back towards its next significant resistance level at $10 a share, or possibly even higher. Idenix, a stock in Seth Klarman's portoflio, shows up on a list of 13 Biotech Stocks Bought and Sold by Hedge Funds in the most recently reported quarter.