One final under-$10 biopharmaceutical player that's quickly moving within range of triggering a major breakout trade is Cytokinetics (CYTK), which is focused on the discovery and development of small molecule therapeutics that modulate muscle function for the potential treatment of serious diseases and medical conditions. This stock has been hit hard by the sellers over the last six months, with shares off sharply by 46%.
If you take a look at the chart for Cytokinetics, you'll notice that this stock has been trending sideways and consolidating for the last three months, with shares moving between $5.99 on the downside and $7.49 on the upside. This stock recently formed a double bottom chart pattern at $6.06 to $5.99 a share. Shares of CYTK have now started to trend higher off that bottom and back above its 50-day moving average of $6.46 a share. That move is quickly pushing shares of CYTK within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern.Traders should now look for long-biased trades in CYTK if it manages to break out above some near-term overhead resistance at $6.97 a share, and then once it clears some past overhead resistance at $7.31 to $7.49 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 428,434 shares. If that breakout hits soon, then CYTK will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $8.32 a share to $8.94 a share. Any high-volume move above $8.94 a share will then give CYTK a chance to re-fill some of its previous gap down zone from September of 2013 that started at $11 a share. Traders can look to buy CYTK off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $6.19 a share or at $5.99 a share. One can also buy CYTK off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. 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 Delafield, Wis.
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