One more under-$10 stock that's setting up for a breakout trade is Sunesis Pharmaceuticals (SNSS - Get Report), a biopharmaceutical company focused on the development and commercialization of new oncology therapeutics for the treatment of hematologic and solid tumor cancers. This is one of the hottest stocks in the market so far in 2012, with shares up over 140%.
If you take a look at the chart for Sunesis Pharmaceuticals, you'll notice that this stock has been uptrending strong for the past six months from a low of $1.14 to a recent high of $3.19 a share. During that move, SNSS has consistently made higher lows and higher highs, which is bullish price action. This stock recently pulled back off that $3.19 high to around its 50-day moving average of $2.68 a share, and its subsequently started to bounce off that 50-day. This could be signaling that SNSS is done selling off and is now going to make another run at breaking out to new highs.
Traders should now look for long-biased trades in SNSS if it can manage to clear some near-term overhead resistance at $3 to $3.19 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 453,774 shares. If we get that move soon, then SNSS should easily tag its next significant overhead resistance level at $3.69 a share. If that $3.69 level is then taken out with volume, this could have tremendous upside towards $5 a share.This is another heavily-shorted stock since 11.8% of the float for SNSS is sold short by the bears. Traders can look to buy this stock in anticipation of the $3 to $3.19 breakout, and simply use a stop right below the 50-day moving average at around $2.55 to $2.52 a share. If that breakout does trigger soon, then SNSS has a great chance of experiencing a sizable short-squeeze that pushes it to new 52-week highs. One last thing about SNSS, this stock has a major catalyst on the horizon. The company will be presenting Phase 3 data on Vosaroxin at ASCO on June 4. Vosaroxin is designed for the treatment of Acute myeloid leukemia AML. The company recently was granted orphan drug designation for Vosaroxin by the European Commission, so things look bright for this drug. To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up To Explode portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
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