My final idea that's setting up to trigger a near-term breakout trade is biotechnology and drugs player Cerus (CERS), a biomedical products company focused on commercializing the Intercept Blood System to enhance blood safety. This stock is off to a bullish start in 2012 with shares up over 25% so far.
If you look at the chart for Cerus, you'll see that this stock has been stuck in a nasty downtrend for the past four months and change, with shares dropping from a high of $4.53 to a recent low of $3 a share. During that downtrend, shares of CRES have consistently made lower highs and lower lows, which is bearish technical price action. That said, CRES has recently started to reverse that trend and make higher lows and higher highs. That move is pushing CRES within range of triggering a near-term breakout trade.
Traders should now look for long-biased traders in CERS if it can manage to trigger a break out above some near-term overhead resistance at $3.63 to $3.83 a share with high-volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 429,778 shares. If we get that move soon, then CRES will have an excellent chance of re-testing and possibly taking out its next major overhead resistance levels at $4.06 to $4.53 a share.One could look to buy CERS off weakness and anticipate the breakout with a stop around its 50-day moving average of $3.53 a share. You could also buy off strength once $3.63 to $3.83 a share are taken out with high-volume, and then use the same stop near the 50-day. There's also some near-term support at $3.40 a share you could use for a stop if you buy off weakness or strength. This is a heavily-shorted stock, since the current short interest as a percentage of the float for CERS is 16.7%. Look for a decent short-squeeze to develop for CERS if that breakout triggers soon. To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV