Another under-$10 stock that's starting to move within range of triggering a major breakout trade is Dynavax Technologies (DVAX - Get Report), which discovers and develops novel products to prevent and treat infectious diseases, asthma and inflammatory and autoimmune diseases. This stock has been hammered by the bears during the last three months, with shares off by 23%.
If you take a look at the chart for Dynavax Technologies, you'll notice that this stock has been uptrending strong since it gapped down last November from around $5 a share. During that uptrend, shares of DVAX have soared from a low of $2.21 to the recent high of $3.39 a share. As the stock has climbed, it has been mostly making higher lows and higher highs, which is bullish technical price action. Shares of DVAX have been consolidating over the last few weeks right above its 50-day, with shares trending around $3 to $3.20. That move has now pushed shares of DVAX within range of triggering a major breakout trade.
Market players should now look for long-biased trades in DVAX if it manages to break out above some near-term overhead resistance levels at $3.21 to $3.39 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 3,766,200 shares. If that breakout triggers soon, then DVAX will set up to re-fill some of its previous gap down zone that started near $5 a share.Traders can look to buy DVAX off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day moving average of $2.92 a share. One could also buy DVAX off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below $3 a share. I would add to either position once DVAX takes out its 200-day moving average at $3.84 a share with heavy volume. This stock has some serious short-squeeze potential if it breaks out soon, since the current short interest as a percentage of its float is very high at 11.2%. If that breakout triggers, then the shorts might not want to be exposed for a fast move into that gap, so put this name on your radar.