Another stock in the biotechnology and drugs complex that's setting up to trigger a major breakout trade is XenoPort ( XNPT), which is focused on developing and commercializing a portfolio of internally for the treatment of neurological disorders. This stock is off to a monster start in 2012, with shares up around 120%.

If you look at the chart for XenoPort, you'll see that this stock has been in a monster uptrend for the last six months, with shares skyrocketing higher from a low of $3.88 to a recent high of $8.79 a share. During that uptrend, shares of XNPT have been mostly making higher lows and higher highs, which is bullish technical price action. That strong uptrend has now pushed XNPT within range of triggering a near-term breakout trade.

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Traders should now look for long-biased traders in XNPT if this stock can manage to take out some near-term overhead resistance at $8.79 a share with high volume. Look for a sustained move or close above $8.79 a share with volume that hits near or above its three-month average action of 609,414 shares. If that breakout triggers soon, then XNPT has the chance to make an extremely large move to the upside. One possible target is the 2011 high for XNPT which sits at $11.34 a share. The reason I think XNPT could hit that level is because there's very little overhead resistance after it clears $8.79.

One could be a buyer of XNPT off any weakness, and simply use a stop that sits just below some major near-term support at $7.50 to $7.30 a share. It's possible that XNPT could pull back to $7 a share before it challenges that breakout, so key off those areas for near-term support. One could also just buy off strength once $8.79 is taken out with volume, and then simply use a stop at around $8 a share.

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