One under-$10 stock that's trading very close to triggering a near-term breakout trade is
(PSTI - Get Report)
, a bio-therapeutics company engaged in the commercialization of non-personalized cell therapy products for the treatment of several severe degenerative, ischemic and autoimmune disorders. This stock has been on fire so far in 2012, with shares up a whopping 60%.
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If you take a look at the chart for Pluristem Therapeutics, you'll notice that this stock recently formed a double top at around $5 to $4.90 a share, after soaring from a low of $2.26 a share. Following that double top, shares of PSTI abruptly pulled back to its recent low of $3.65 a share. During that pullback, shares of PSTI were making lower highs and lower lows, which is bearish technical price action. That said, the stock has now started to rebound back above its 50-day moving average of $4 a share. That move is quickly pushing PSTI within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in PSTI as long as it's trending above its 50-day at $4, and then once it breaks out above some near-term overhead resistance at $4.28 a share with high volume. Look for a sustained move or close above $4.28 with volume that hits near or above its three-month average action of 1.4 million shares. If that breakout triggers soon, then PSTI will setup to re-test or possibly take out those double top price levels at $4.90 to $5 a share. Any high-volume move above $5 a share should setup PSTI to trend north of $6 a share.
Traders can now look to buy PSTI off weakness and simply use a stop somewhere below its 50-day moving average of $4 a share, or possibly around that recent low of $3.65 a share. A better strategy might be to buy off strength once PSTI takes out $4.28 a share with volume and then use a stop right around its 50-day.