One health care player to watch here is TearLabs (TEAR), which engages in developing and commercializing TearLab Osmolarity System, a proprietary in vitro diagnostic tear testing platform that measures tear film osmolarity for the diagnosis of dry eye disease. This stock has been destroyed by the bears over the last six months, with shares off sharply by 50%.

If you take a look at the chart for TearLabs, you'll notice that this stock has been downtrending badly over the last six months, with shares falling from its high of $15.18 to its recent low of $6 a share. During that downtrend, shares of TEAR have been making mostly lower highs and lower lows, which is bearish technical price action. That move has now pushed shares of TEAR into extremely oversold territory, since its current relative strength index reading is 30.78. Oversold can always get more oversold, but shares of TEAR are starting to perk up here and the stock could be setting up for a monster move higher.

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Traders should now look for long-biased trades in TEAR if it manages to break out above some near-term overhead resistance levels $6.49 to $6.86 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 566,432 shares. If that breakout hits soon, then TEAR will set up for a powerful bounce higher off oversold levels that could easily take this stock back towards its 50-day moving average at $8.44 or even its 200-day moving average at $10.50 a share.

Traders can look to buy TEAR off any weakness to anticipate that breakout and simply use a stop that sits right below its recent low of $6 a share. One can also buy TEAR off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

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