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5 Stocks Setting Up to Break Out

Vivus

A biopharmaceutical player that's trading within range of triggering a major breakout is Vivus (VVUS - Get Report), which is engaged in development and commercialization of therapeutic drugs for large underserved markets, including obesity and related morbidities, such as sleep apnea and diabetes and men's sexual health. This is one of the hottest stocks in 2012, with shares up over 120%.

If you take a look at the chart for Vivus, you'll notice that this stock has been trending within a range of around $18 to $25.14 a share for the past month. This range-bound trend is helpful because it will make it easier to identify the next major move for VVUS. That trend looks to be setting up for a move to the upside since the stock is currently within a shouting distance of making new highs.

>>5 Big Stocks to Trade for Gains

Traders should now look for long-biased trades if VVUS can manage to break out above Thursday's high of $23.75 and some near-term overhead resistance at $25.15 a share with high-volume. Look for volume off a sustained move and close above those levels that registers near or well above its three-month average action of 6.6 million shares.

If we get that action soon, then look for VVUS to make a big spike to the upside since the shorts will probably cover quickly with the stock making new 52-week highs. I would simply avoid this stock if that breakout never triggers with volume, or if VVUS breaks back below $19.55 to $18 with high volume. If those levels are ever lost on the downside then this stock could fill some of that huge gap up from back in February.

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SYM TRADE IT LAST %CHG
BCEI $26.97 -7.80%
DNDN $0.06 -6.02%
HZNP $20.54 7.70%
TRIP $89.25 -0.68%
VVUS $2.62 -2.60%

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