Another stock that's setting up to hit a near-term breakout trade is Chelsea Therapeutics (CHTP), a specialty pharmaceutical company focused on the acquisition, development and commercialization of innovative pharmaceutical products. This stock has been hammered by the bears so far in 2012, with shares down a whopping 73%.
If you take a look at the chart for Chelsea Therapeutics, you'll see that for the last two months, this stock has been trending sideways between $1.10 on the downside and $1.48 on the upside. As CHTP has trended sideways, the stock has found buying interest each time it's pulled back near its 50-day moving average. Shares of CHTP are now starting to push higher and move within range of triggering a near-term breakout trade.Market players should now look for long-biased trades in CHTP once it manages to take out some near-term overhead resistance levels at $1.39 to $1.48, and then $1.54 a share with high volume. Look for a sustained move or close above those levels with volume that hits close to or above its three-month average action of 456,323 shares. If that breakout triggers soon, then CHTP will setup to re-test or possibly take out its next significant overhead resistance levels at $1.83 to $1.99 a share. Any high-volume move above those levels will then put $2.20 to $2.32 a share into focus. One can look to buy CHTP off any weakness to anticipate that breakout, and simply use a stop that sits right below its 50-day moving average of $1.17 a share. One could also buy off strength once CHTP clears those near-term breakout levels with volume, and then use a stop just below $1.30 a share. I would add to either position aggressively if CHTP takes out $2.20 to $2.32 a share with volume.
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 Plus 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