Ziopharm Oncology

Another under-$10 name that's trading very close to triggering a near-term breakout trade is Ziopharm Oncology ( ZIOP), a biopharmaceutical company engaged in the development and commercialization of small molecule and synthetic biology approaches to new cancer therapies. This stock is off to a decent start in 2012, with shares up around 16% on the year.

>>22 Biopharma Stocks With Breakout Potential in 2012

If you take a look at the chart for Ziopharm Oncology, you'll notice that this stock recently dropped sharply from around $4.75 to a low of $3.36 a share with heavy volume. Following that plunge, shares of ZIOP have rebounded sharply to its current price of around $5.10 a share. That rebound is quickly pushing ZIOP within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in ZIOP if it can manage to trigger a break out above some near-term overhead resistance levels at $5.31 to $5.75 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 639,378 shares. If that breakout triggers soon, then ZIOP will setup to re-test or possibly take out its next major overhead resistance levels at $6.02 to $6.33 a share. Any high-volume move above $6.33 will put $7 to $7.85 into focus for ZIOP.

Traders can look to buy ZIOP off any weakness, and simply use a stop that sits just below some near-term support at $5 a share. One could also buy ZIOP once it clears its 50-day at $5.20 with high volume. Look to add to either position once ZIOP takes out $5.31 to $5.75 a share, and then once it clears $6.02 to $6.33 a share with high volume.

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