One diagnostics player that could be setting up to rip sharply higher here is BG Medicine (BGMD - Get Report), which engages in the development and commercialization of novel cardiovascular diagnostic tests to address unmet medical needs in the U.S. This stock has been in play with the bulls big time over the last three months, with shares up sharply by 117%.
If you consult the chart for BG Medicine, you'll see that this stock has been uptrending over the last few weeks, with shares moving higher from its low of $1.10 to its recent high of $1.38 a share. During that uptrend, shares of BGMD have been consistently making higher lows and higher highs, which is bullish technical price action. That move is now starting to push shares of BGMD within range of triggering a major breakout trade above a key downtrend line that started last December.
Traders should now look for long-biased trades in BGMD if it manages to break out above some near-term overhead resistance levels at $1.30 to $1.38 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 volume of 2.08 million shares. If that breakout hits soon, then BGMD will set up to re-test or possibly take out its next major overhead resistance levels at $1.57 to $1.65 a share or $1.70 a share. Any high-volume move above those levels will then give BGMD a chance to tag $2 to $2.20 a share.
Traders can look to buy BGMD off any weakness to anticipate that breakout and simply use a stop that sits right below its 200-day moving average of $1.09 a share. One can also buy BGMD off strength once it starts to rip above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.