One under-$10 stock that's trending very close to trigger a major breakout trade is Peregrine Pharmaceuticals (PPHM - Get Report), which is developing first-in-class monoclonal antibodies for the treatment and diagnosis of cancer. This stock has been uptrending modestly so far in 2013, with shares up 8.3%.
If you take a look at the chart for Peregrine Pharmaceuticals, you'll notice that this stock has recently put in a triple bottom chart pattern at $1.20, $1.29 and $1.27 a share. This stock is now starting to bounce off those support levels, and it's quickly moving within range of triggering a major breakout trade. If that triple bottom can hold, then shares of PPHM could be setting up for a monster move higher.Traders should now look for long-biased trades in PPHM if it manages to break out above its 200-day moving average at $1.58 and its 50-day moving average at $1.62 a share and then above some more resistance at $1.68 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 5.12 million shares. If that breakout triggers soon, then PPHM will set up to re-test or possibly take out its next major overhead resistance levels at $2.40 to $2.78 a share. Any high-volume move above $2.78 would then put a huge gap down zone from last September into play that started at $5.50 a share. Traders can look to buy PPHM off any weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $1.27 to $1.20 a share. One can also buy PPHM off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $1.40 a share. I would add to either position once PPHM takes out $1.68 a share with heavy volume. The shorts are pretty involved in this stock, since its current short interest as a percentage of the float for PPHM is 9.7%. If that breakout triggers soon, then PPHM could get squeezed higher as the bears rush to cover some of their short bets.