BioCryst Pharmaceuticals

My final stock that's setting up to trigger a near-term breakout trade is biotechnology and drugs player BioCryst Pharmaceuticals ( BCRX). This company designs, optimizes and develops drugs that block enzymes involved in therapeutic areas of interest to the company. This stock is blazing a trail to the upside so far in 2012, with shares up more than 60%

If you look at the chart for BioCryst Pharmaceuticals, you'll notice this stock was hammered by the bears from its March high of $5.95 to a recent low of $2.89 a share. During that slide lower, shares of BioCryst have consistently made lower highs and lower lows, which is bearish technical price action.

That said, since hitting that low of $2.89, the stock has started to reverse that bearish trend and make higher lows and higher highs. Shares of BioCryst have also started to break out today above some near-term overhead resistance at $3.72 to $3.83 a share with heavy volume. That move is now pushing BCRX within range of trigging another major breakout trade.

Traders should now look for long-biased traders in BCRX, if it can manage to trigger a break out above some near-term overhead resistance at $4.25 a share with high volume. Look for a sustained move or close above $4.25 with volume that hits near or above its three-month average action of 283,736 shares. If we get that move soon, then BCRX could easily trade back toward its next significant overhead resistance levels at $5.51 to $5.95 a share.

One could look to buy BCRX off weakness and anticipate the breakout with a stop at around $3.75 a share. You could also buy BCRX off strength and get long once it clears $4.25 with high volume. I would simply use a stop at around $3.70 to $3.50, if you buy off strength, in case the breakout fails to hold. It's worth pointing out that volume today is already close to 1 million shares traded, with BCRX up over 7% to $4 a share. This action shows that large traders could already be positioning for a larger move higher in BCRX.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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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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