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5 Stocks Under $10 Poised for Breakouts

Isis Pharmaceuticals

An under-$10 name in the biotechnology and drugs complex that's trading within range of a major breakout trade is Isis Pharmaceuticals (ISIS - Get Report), which is engaged in antisense technology, exploiting a drug discovery platform to create a pipeline of drugs. This stock is off to a decent start in 2012, with shares up over 25%.

If you take a look at the chart for ISIS Pharmaceuticals, you'll see that this stock has been trading between $7 and $9.30 a share for the past six months. During that timeframe, ISIS has tested that $9.30 area a number of times but has failed to take it out. This stock is now making another attempt at finally breaking out above $9.30 a share. In fact, on Wednesday ISIS hit an intraday high of $9.37 a share before closing at $9.23. That $9.37 level is past overhead resistance from July of 2011.

>>7 Stocks With Relative Strength to Beat the Market

Market players should now look for long-biased trades in ISIS if it can manage to trigger a break out above some near-term overhead resistance levels at $9.28 to $9.37 a share with high volume. Look for a sustained move or close above those levels on volume that's near or well above its three-month average action of 595,523 shares. If we get that action soon, then ISIS could easily continue its uptrend towards $11 to $13 a share in the near future.

Keep in mind that ISIS sports a decent short interest. The current short interest as a percentage of the float for ISIS is 10.4%. If that breakout triggers soon, then this stock could see a solid short-covering rally. I would look to buy this stock off strength once that breakout triggers with volume, and use a stop at around $9 to $8.75 a share in case the breakout fails to hold.
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