A biopharmaceutical player that could be setting up to break out is Vivus ( VVUS), which is engaged in the development and commercialization of therapeutic drugs for large underserved markets, including for sleep apnea, diabetes and men's sexual health. This stock hasn't done much so far this year, with shares off by around 5%.

If you take a look at the chart for Vivus, you'll see that this just ran up big from its August low of $6.13 a share to its current price of just over $8.70 a share. During that uptrend, the stock was acting very bullish, making higher highs and higher lows. As long as that pattern of higher highs and higher lows continues, then this stock is going to continue to trend higher.

Market players should now watch for a breakout in Vivus that sustains a move above some previous overhead resistance at $9.07 a share. Just yesterday, the stock hit $9.62 a share on massive volume of 4.9 million shares, but since then it's pulled back below the breakout level of $9.07. This could mean the breakout attempt was a failure, or it could mean the stock wants to fill a gap to $8.50 before it starts another trend higher.

Related: 11 Biotech Stocks With Hedge Fund Activity

If you're bullish on Vivus, you could buy the stock once it clears $9.07 again on big volume. Look for volume that's tracking in close to or well above its three-month average volume of 1.5 million shares. If this stock does break out again, then I would add to any long position once it clears $9.62 on solid volume.

You could also buy the stock off any significant weakness and anticipate the breakout. I would use a stop at around $8 a share in case the bears take back control of this stock in the near future.

Keep in mind that this is a heavily shorted stock with over 19.3% of the float sold short by the bears. If this stock breaks out in the coming weeks or days again, then watch for a high volume move that could lead to a massive short-squeeze.

I also included Vivus on a recent list of 5 Stocks Under $10 Setting Up to Trade Higher.

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