This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Speculative Money Propels Biotechs La Jolla Pharma, Aeterna Zentaris

Stocks in this article: LJPC AEZS NBS

NEW YORK (TheStreet) -- When speculative money is flowing into the stock market, as it is right now, I like to focus on biotech stocks. The biotech sector is on fire, so it's a great place for traders to find stocks ready to break out from consolidations.

A recent example of interest in this very hot area right now is the huge move we have seen in shares of La Jolla Pharmaceutical  (LJPC) over the last month. During that time, La Jolla has seen it shares gain 135%. Today as of 3:55 p.m., La Jolla is up 64% to $17.91 on the heels of very good trial data for its kidney disease drug.

Such a large move in the biotech sector usually drives traders into other nicely set up biotech charts. That's happening with shares of Aeterna Zentaris  (AEZS). At 3:55 p.m. today, shares were at $1.49, up 16.5% for the day. 

Aeterna is one of the more hated biotech stocks around, with it shares seeing some large volatility over the last year. Looking at the chart below, we can see Aeterna is setting up for a pretty significant chart breakout now that it has passed $1.34. A break of this resistance level should see the stock make an attempt on the 200 day moving average at $1.48 -- and that's exactly where it's hitting today.

Above this level, the stock would look to challenge its November 2013 high of $1.74. That's a potential 30% upward move on the chart. Aeterna has had solid support at $1.25. Now that the stock has overcome the small band of resistance at $1.39, this should set Aeterna free for a sustained move higher.

Traders should monitor volume in Aeterna for a confirmation of this breakout. When Aeterna sees volume above 4 million shares, it has been a signal in the past that the move higher is real. A 17 million volume day in early January saw Aeterna move from $1.12 to $1.39 within a week, for a very nice 25% return.

This is important: small cap biotechs are volatile, and traders considering them should adhere strictly to stops.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs