One more under-$10 name that's trending very close to triggering a major breakout trade is Pozen (POZN - Get Report), which is a pharmaceutical development company that focuses on migraine treatment through the use of triptans and different delivery mechanisms. This stock has been downtrending over the last six months, with shares off by 24%.
If you take a look at the chart for POZN, you'll see that this stock has dropped sharply from its March high of $6.49 a share to its recent low of $4.55 a share. During that selloff, shares of POZN were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of POZN have started to rebound off that $4.55 low with the stock hitting a recent high of $5.15 a share. That move is coming with expanded upside volume and now shares of POZN are quickly moving within range of triggering a major breakout trade.
Traders should now look for long-biased trades in POZN if it manages to break out above some near-term overhead resistance at $5.15 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 236,000 shares. If that breakout triggers soon, then POZN will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $5.66 to its 200-day moving average at $5.89 a share. Any high volume move above those key moving averages and then above $6.11 will put $6.50 into range for shares of POZN.Traders can look to buy POZN off weakness to anticipate that breakout and simply use a stop just below some key near-term support levels at $4.65 to $4.55 a share. One can also buy off strength once POZN clears $5.15 with volume and then simply use a stop just below $4.65 a share. To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
Twitter and become a fan on Facebook.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts