NEW YORK (TheStreet) -- The past few weeks, I have highlighted some under $5 stocks. There was a weak one that we took a flyer on and it failed -- Hansen Medical (HNSN) . Then there was Hudson Technologies (HDSN) - Get Report which was stronger but retracing. That one still has possibilities.

Last week, I highlighted

Dreams Inc.


which has been on a tear. That is resting now and providing entry points for new and additive buys.

Today, I look at



, a small-cap biotech firm that has possibilities in the Hepatitis C drug market. It is also pursuing a shingles drug product. Both are in clinical trials, so buyers beware.

The problem, as you know, with biotech companies is that they are volatile and the risk of adverse FDA rulings is always present. The only way I have ever been successful in trading them is to spread the money around to those with good charts and to not let any of the positions grow too large as compared to the overall portfolio.

The charts are favorable.

Here is the daily chart showing the run up in price of late.

The current trend is suspect because price went over the swing point with slightly less volume. That suggests it is quite possible to see a retrace back into the $2.15 to $2.30 area but unless something goes awry on the way back, that is probably going to be an opportunity to buy when and if it happens. The volume characteristics are quite favorable on this time frame. There is also a support zone that has formed as a result of the gap up just over the $2.40 area.

On the weekly chart, you can see the volume spike to $2.95 that was tagged last week. That also suggests that a pullback is likely. The reason for bringing this stock forth now, however, isn't so much to buy with abandon at this price point but to pick at it as it retrace and keep it on your watch list for it has the potential to move significantly higher in the future.

On this chart, you can see an example of what I expect to play out in the coming weeks for Inhibitex on the daily chart. On this chart, the break higher in February was suspect much like the break higher on the daily chart is now. When that happens, it is common to see the stock work its way back to retest and regenerate. In this chart, you can see the highlighted retest zone and how price came back to that zone, tested and then took off. When prices retreated back to that same price zone in August, again the stock was support and price turned and worked higher.

Looking back at the daily chart, assume the same sort of scenario. On that chart, price should work its way back toward the highlighted retest and regenerate zone as well. If the retreat comes on light volume as compared to the volume on the previous swing point high and the breakout bar, then it too should regenerate and head higher once more.

Until next time, just keep trading the charts!

At the time of publication, Little was long INHX.

L.A. Little, author, professional trader and money manager, writes daily on

, a free educational site for traders and investors. He has been featured in numerous publications and is the author of

Trade Like The Little Guy


His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.