Raptor Pharmaceutical

One more breakout candidate is biotechnology player Raptor Pharmaceutical ( RPTP), which is dedicated to speeding the delivery of new treatment options to patients by working to improve existing therapeutics through the application of highly specialized drug targeting platforms and formulation expertise. This stock is off to a bullish start in 2011, with shares up by over 29%.

If you take a look at the chart for Raptor Pharmaceutical, you'll see that this stock dropped notably in the last couple of months from its high of $6.99 a share to its recent low of $3.66 a share. Since that drop, the stock has now started to form a basing chart pattern between $3.66 and $4.80 a share. Whenever a stock starts to base like this, the next major move will come from either a break above or below the defined ranges.

Judging by the action today, with the stock up 7% trading at $4.70, it looks like it's poised to break out above the upper end of the basing pattern range. Market players should watch this stock for a move and close above $4.80 on strong volume. Look for volume that's tracking in close to or above its three-month average action of 633,000 shares. The next bullish signal will trigger once the stock then takes out its 50-day moving average of $5.06 on solid volume.

You could buy this stock on any weakness with a stop just below the 200-day moving average of $4.32 a share. You could also buy strength and just buy off the breakout above $4.80 and $5.06 a share. If we do get the breakout, then this stock could easily run up towards $5.75 or $7 a share quickly.

This is also a heavily shorted name with over 8.1% of the float is sold short by the bears. Those short-sellers have also been increasing their bets from the last reporting period by around 10.7%, or by about 259,400 shares. If the bears are caught leaning the wrong way, then look for a big short-squeeze in the coming days or weeks.

To see more breakout candidates, including MAKO Surgical ( MAKO), Xoma ( XOMA) and Gushan Environment Energy ( GU), check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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