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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Poised for Breakouts

Stocks in this article: HEES ZNGA YELP Z GHDX PPHM

Peregrine Pharmaceuticals

My final idea that's trending very close to triggering a major breakout trade is Peregrine Pharmaceuticals (PPHM), a biopharmaceutical company developing first-in-class monoclonal antibodies for the treatment and diagnosis of cancer. This stock has been on fire during the last three months, with shares up a whopping 62%.

If you look at the chart for Peregrine Pharmaceuticals, you'll notice that this stock has been trending sideways during the last month, with shares moving between $1.64 on the upside to $1.08 on the downside. Shares of PPHM have recently started to bounce right off its 200-day moving average of $1.21 a share and its quickly moving within range of breaking out above the upper-end of its sideways trading pattern. If that breakout were to occur, then shares of PPHM would start to move within range of a huge gap down zone from last September that started at $5.50 a share.

Traders should now look for long-biased trades in PPHM if it manages to break out above some near-term overhead resistance levels at $1.44 to $1.45 a share and then once it clears some more overhead resistance levels at $1.64 to $1.94 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 3.8 million shares. If that breakout triggers soon, then PPHM will set up to re-fill some of its previous gap down zone from September that started at $5.50 a share. A reasonable target before any test of that $5.50 area is $3 a share if we get into that gap with volume.

Traders can look to buy PPHM off any weakness to anticipate that breakout and then simply use a stop that sits just below some key near-term support levels at $1.12 to $1.08 a share or even its 50-day moving average at $1.03 a share. Traders can also just buy PPHM off strength once it takes out $1.44 to $1.45 a share and then simply use a stop that sits just below its 200-day moving average at $1.21 a share. I would add to either position once PPHM takes out $1.64 to $1.94 a share with heavy upside volume.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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