Another under-$10 stock in the biotechnology and drugs complex that looks ready to trigger a major breakout trade is Cornerstone Therapeutics (CRTX), a specialty pharmaceutical company focused on commercializing products for the hospital, respiratory and related specialty markets. This stock has been trending higher so far in 2012, with shares up over 25%.
This company just announced on Wednesday that the FDA has scheduled a review of the new drug application for Lixivaptan. The drug treats a condition in which the blood sodium levels of patients with heart failure are abnormally low. The FDA panel will meet to discuss Lixivaptan on Sept. 13.
If you take a look at the chart for Cornerstone Therapeutics, you'll notice that this stock has been uptrending strong for the past month and a half, with shares soaring from $4.88 to a recent high of $7.25 a share. During that sharp move higher, shares of Cornerstone Therapeutics have been making higher lows and higher highs, which is bullish technical price action. This stock also just triggered a major breakout trade once it cleared some key overhead resistance levels at $6.96 to $7.00 a share with monster volume. Volume for the last two trading sessions as registered 807,000 shares and 203,000 shares, which is well above its three-month average action of 64,970 shares. This move is now setting up CRTX to continue its run higher, possibly right into its FDA meeting on Sept. 13.>>Hot Biotech Stocks Traded by Hedge Funds Traders should now look for long-biased trades in CRTX if this stock can manage to sustain its breakout above $6.50 to $7.00 a share with strong upside volume flows. I would consider any upside volume day that registers near or above 64,970 shares as bullish. If we continue to see CRTX sustain that trend, then this stock has a great chance of re-testing and possibly taking out its next major overhead resistance levels at $8.50 to $9.20 a share. If you like the setup for CRTX here, then one could look to buy this stock off any weakness and simply use a stop just under $6.50 a share, or possibly even around $6.20 if you want to give it more room to the downside. This stock could even pullback to $6 a share and still be well within its healthy uptrend, but I would prefer to see it hold above those key breakout levels of $6.50 to $7 a share.