Another stock that's trending very close to triggering a major breakout trade is Rigel Pharmaceuticals (RIGL - Get Report), a clinical-stage drug development company that discovers and develops novel, small-molecule drugs for the treatment of inflammatory/autoimmune diseases, as well as for certain cancers and metabolic diseases. This stock has been hammered by the bears so far in 2013, with shares off by a 28%.
If you look at the chart for Rigel Pharmaceuticals, you'll notice that this stock recently gapped down huge from over $7.50 a share to its 52-week low of $4.41 a share with heavy downside volume. That move has pushed shares of RIGL into oversold territory, since its current relative strength index reading is 30. Oversold can always get more oversold, but it's also an area where a stock can experience a powerful bounce higher from if buyers step in. Shares of RIGL have started to trend up off that $4.41 low and it's now quickly moving within range of triggering a major breakout trade.Traders should now look for long-biased trades in RIGL if it manages to break out above some near-term overhead resistance at $4.81 a share and then once it takes out its gap down day high of $5.14 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 volume of 729,058 shares. If that breakout triggers soon, then RIGL will set up to re-fill some of its previous gap down zone from earlier this month that started above $7.50 a share. Traders can look to buy RIGL off any weakness to anticipate that breakout and simply use a stop that sits right below its 52-week low of $4.41 a share. One can also buy RIGL off strength once it takes out those breakout levels with volume and then simply use a stop just below at around $4.70 to $4.50 a share.