Another stock that's trading close to triggering a near-term breakout is Spectrum Pharmaceuticals (SPPI - Get Report), a biotechnology company with integrated commercial and drug development operations with a focus in hematology and oncology. This stock has been trending lower so far in 2012, with shares off by over 16%.
If you look at the chart for Spectrum Pharmaceuticals, you'll see that the bears have destroyed this stock during the last two months following a double top chart pattern at around $17.48 to $17.19 a share. Shares of SPPI went on to plunge off that double top and recently hit a low of $11.13 a share. During that sharp move lower, shares of SPPI were consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to stabilize and trend sideways between $11.33 and $12.76 a share.
Traders should now look for long-biased trades in SPPI if it can manage to break out above some near-term overhead resistance at $12.75 to $12.76 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 1.9 million shares. If that breakout triggers soon, then SPPI will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $14 to $14.50 a share. If SPPI can take out $14 to $14.50 a share, then it could easily trade north of $15 a share.One could look to buy SPPI off weakness and simply use a stop that sits just below some near-term support at $11.79 to $11.33 a share. You could also buy off strength once SPPI takes out $12.75 to $12.76 with volume, and then simply use a stop at around $11.80 a share. I would look to add to either position once SPPI clears $14 to $14.50 with heavy upside volume.