Another under-$10 stock that's setting up to trigger a major breakout trade is Arrowhead Research (ARWR - Get Report). This is a development stage nanotechnology holding company that forms, acquires, and operates subsidiaries commercializing innovative nanotechnologies. The stock has been hit hard by the sellers so far in 2012, with shares down by over 50%.
If you take a look at the chart for Arrowhead Research, you'll notice that just yesterday this stock exploded higher right off some previous support levels at $2.05 to $2.17 a share with monster upside volume. That move was driven by some positive drug data that showed a 99% target knockdown in monkeys without toxicity. That spike has now pushed ARWR within range of triggering a near-term breakout trade.
Market players should now look for long-biased trades in ARWR once it manages to trigger a breakout above some near-term overhead resistance levels at $2.74 to $2.80 a share, and then above $3 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 52,871 shares. If that breakout triggers soon, then ARWR has a chance for an explosive move higher back towards its next major overhead resistance levels at $3.50 to $4 a share, or possibly even $4.20 to $4.50 a share.Traders can look to buy ARWR off any weakness as long as it's trending above yesterday's low of $2.32 a share with strong upside volume flows. You could also buy off strength once ARWR takes out $2.74 to $3 a share with heavy volume, and then simply use a stop that sits just below its 50-day at $2.53 a share.