Another under-$10 name that's starting to trigger a big breakout today is medical equipment and supplies player
(DXCM - Get Report)
. This stock has been a loser in 2011 with shares off by over 30%.
If you take a look at the chart for DexCom, you'll notice that this stock plunged from its September high of $13.69 to a recent low of $6.75 a share hit in November. Since printing that low, the stock has started to firm up and ramp higher while shares are making higher lows, which is bullish. Now DXCM is starting to trigger a big breakout with shares moving above some near-term overhead resistance levels.
Traders should now watch DXCM to see if the stock can maintain a sustained high-volume move and close above $8.53 to $8.56 a share. This stock has already started to trend above those levels intraday with shares currently trading near $9.05. Look for volume at today's close that registers near or above its three-month average action of 707,829 shares to signal that this stock wants to trend significantly higher in the near future.
One could be a buyer of this stock off any noticeable weakness since the breakout has already started to happen. I would simply use a mental stop that's just below its 50-day moving average of $8.32 in case this breakout fails. I would then add to any long positions once DXCM takes out some near-term overhead resistance at $11.05 with volume. Target a run back toward $12.49 (200-day) or possibly $13.69 a share.
DexCom has a decent short interest since 9.1% of its tradable float is currently sold short by the bears. This breakout today, if it holds, could kickoff a much larger short-covering rally in the near future.