5 Biotech Stocks Under $10 Set to Soar
Another under-$10 name in the biotechnology and drugs complex that looks ready to trigger a major breakout trade is DepoMed (DEPO), a specialty pharmaceutical company initially focused on neurology, pain and other diseases of the central nervous system. This stock is off to a decent start so far in 2012, with shares up over 8%.
If you take a look at the chart for DepoMed, you'll see that this stock was whacked by the bears back in late April, with shares dropping from a high of $6.64 to a recent low of $4.75 a share. During that downtrend, shares of DEPO were consistently making lower highs and lower lows, which is bearish technical price action. That said, DEPO has started to rebound sharply since hitting that $4.75 low, with the stock now making higher lows and setting up for higher highs. Shares of DEPO have now moved into position to trigger a major near-term breakout trade.
Traders should now look for long-biased trades in DEPO if it can manage to trigger a break out above some near-term overhead resistance at $5.75 to $5.86 a share with high volume. Look for volume off a sustained move or close above those levels that hits near or above its three-month average action of 360,300 shares. If that breakout triggers soon, then DEPO could easily re-test and possibly take out its next major overheard resistance levels at $6.64 to $6.70 a share, or possibly even $7.15 a share.If you like the setup here for DEPO, then one could get long off any weakness and simply use a stop just below its 50-day at $5.38 a share, or even right below $5.25 a share. One could also wait for strength and buy once DEPO takes out $5.75 to $5.86 with heavy volume, and then just use a stop right below its 50-day moving average of $5.38 a share. This is another favorite name among the bears, since the current short interest as a percentage of the float for DEPO is high at 7.1%. If that breakout triggers soon, then we should see a solid short-covering rally materialize for DEPO.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $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
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV