One under-$10 stock that's trending very close to trigger a near-term breakout trade is
Biocryst Pharmaceuticals (
BCRX), a biotechnology company that designs, optimizes and develops novel drugs that block key enzymes involved in cancer, viral infections and autoimmune diseases. This stock has been in play with the bulls so far in 2013, with shares up 38%.
If you take a look at the chart for Biocryst Pharmaceuticals, you'll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $1.62 to its recent high of $2.09 a share. During that uptrend, shares of BCRX have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BCRX within range of triggering a near-term breakout trade.
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Traders should now look for long-biased trades in BCRX if it manages to break out above some near-term overhead resistance levels at $2.09 to $2.21 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 1.34 million shares. If that breakout triggers soon, then BCRX will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day of $2.55 a share to $2.88 a share. Any high-volume move above $2.88 will then put $3.25 to $4 into range for shares of BCRX.
Traders can look to buy BCRX off weakness to anticipate that breakout and simply use a stop that sits just below some near-term support levels at $1.85 to $1.70 a share. One can also buy BCRX off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $1.85 a share.
This stock has a decent amount of bears involved in the name, since the current short interest as a percentage of the float for BCRX is pretty high at 11.8%. We could easily see a large short-squeeze if BCRX breaks out soon, so make sure to put this name on your breakout trading radar.
Make note that Biocryst Pharmaceuticals is set to report earnings next week Tuesday before the market opens. Traders can look to play this breakout ahead of the quarter, or after the quarter, but holding through always holds addition risks.