Another under-$10 name that's trending very close to triggering a major breakout trade is MEI Pharma (MEIP), which is developing cancer therapeutics based on the central design of naturally occurring compounds called isoflavones. This stock has been on fire during the last six months, with shares up a whopping 227%.
If you take a look at the chart for MEI Pharma, you'll notice that this stock formed a double bottom at around $4.36 to $4.50 a share earlier this month. After marking that bottom, shares of MEIP have soared and moved back above its 50-day moving average with heavy upside volume flows. That move has now pushed shares of MEIP within range of triggering a major breakout trade.
Traders should now look for long-biased trades in MEIP if it manages to break out above some key overhead resistance at $7.70 a share with high volume. Look for a sustained move or close above $7.70 a share with volume that registers near or above its three-month average volume of 72,208 shares. If that breakout triggers soon, then MEIP will set up to re-test or possibly take out its next major overhead resistance levels at $10.08 to around $13 a share. Any high-volume move above $13.20 would then send shares of MEIP into new 52-week high territory, which is bullish technical price action.Traders can look to buy MEIP off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $6.55 a share or around $6 a share. One could also buy MEIP off strength once it clears $7.70 a share with volume and simply use a stop that sits right around its 50-day moving average of $6.55 a share. This stock has very explosive upside potential if that breakout triggers soon, since its tradable float is just 1.47 million shares. A low-float name like this can move to the upside very quickly if buyers move into the stock with force, since the supply of actual stock to trade is so small.