One stock that's trading very close to triggering a major breakout trade is
(SUPN - Get Report)
, a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system diseases, including neurological and psychiatric disorders. This stock has been on fire so far in 2012, with shares up a whopping 120%.
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This company has a catalyst on the horizon, since it has a PDUFA date on Oct. 19 for the possible approval for Trokendi XR, a once-daily extended release formulation of topiramate for epilepsy. (PDUFA stands for the FDA's Prescription Drug User Fee Act.) A PDUFA date is the date on which the FDA has agreed to make a decision on the regulatory approval or rejection of a new drug's marketability in the U.S. based on efficacy and safety data from clinical trials.
If you take a look at the chart for Supernus Pharmaceuticals, you'll notice that this stock has just started to trend back above its 50-day moving average of $11.98, which is bullish technical price action. That move is quickly pushing SUPN within range of taking out some near-term overhead resistance levels.
Traders should consider long-biased trades in SUPN once it manages to break out above some near-term overhead resistance levels at $13.51 $14.15 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 89,279 shares. If that breakout triggers soon, then SUPN will have a great chance of re-testing or possibly taking out its next major overhead resistance level at $16.68 a share. Due to the PDUFA coming up shortly, the stock will have a great chance of taking $16.68 out if momentum traders pile into the stock ahead of the FDA meeting.
One could look to buy SUPN off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $11.98 a share. One could also buy off strength once SUPN starts trending above $13.51 to $14.15 a share with high volume and then simply use a stop right below $12.85 a share.