This Stock is Primed for a Double-Digit Breakout

There are as many reasons why a stock will go up in price as there are Wall Street analysts. But, the tried and true methods remain constant.

That’s the case for a biotech stock we’ve got our eye on, and it could mean double-digit profits for you…

Many people look for a new drug breakthrough as a catalyst for biotech stocks.

Or the catalyst could be a change in healthcare regulations.

Or maybe a stock was unfairly punished because one of its peers did something wrong.

Instead, we’ve found a biotech stock with a bullish tailwind based on technical indicators.

In fact, Money Morning Quantitative Specialist Chris Johnson thinks this stock’s chart is showing a bullish trend the rest of Wall Street is overlooking.

And you could bank an easy profit by getting on the right side of this trade…

This Biotech Stock Could Hit $100 a Share

Chris thinks the stars are aligned for BioMarin Pharmaceutical Inc. (Nasdaq: BMRN).

It’s an excellent pharmaceutical company that focuses on therapeutics for rare genetic diseases. And while this is a niche area in the world of biotech, the drugs here can cost hundreds of thousands of dollars.

The company has a strong pipeline and a pretty good track record of getting Food and Drug Administration approval for its new products. Indeed, it just got approval for Palynziq, which treats a rare disease with $620 million sales potential.

The company feels so strongly about its potential to help people – and make money – that the CEO got emotional about its latest breakthrough on the company’s recent earnings call.

Analysts like it, too. Canaccord Genuity just upgraded the stock to a “buy” following a slew of upgrades from others.

While BioMarin’s pipeline continues to produce profitable drugs, what we’re seeing in the technical charts shows its stock has plenty of room to run higher.

The stock currently trades above its short moving averages, which are also above long moving averages. This is a clear sign of technical strength. What it means is that both traders and investors alike are already winning by holding this stock.

And as we know, winning tends to draw in more demand, keeping the profitable cycle going.

Just think about the demand created when its 50-day moving average crosses above the 200-day moving average. The “golden cross,” as it’s called, is a classic bullish indicator, and it’s only days away from happening.

That’s creating a ripe opportunity to cash in while Wall Street looks the other way. Here’s how to play it…

Beating Wall Street at Its Own Game

Even though it’s a solid company and has shares that show solid technical momentum, short sellers keep making bets against it. That’s a mistake, and one we can exploit to our benefit.

Short interest is simply the number of shares of a stock that have been sold short. In other words, the bearish trader borrows shares of the stock and sells them in the open market. If the price falls, the short trader can repurchase them at a lower cost, banking a profit.

But if the stock price continues to rise, the short trader gets burned. The pain starts to build, but sooner or later the losses are too great. The trader must buy back, or cover, those shares and take the loss.

The good part for us is that all those bears throwing in the towel creates even more demand for the stock and pushes share prices even higher.

For BioMarin, more than 12 million shares are currently held short, with a short interest ratio of 9.1. That’s the number of short shares divided by the daily average trading volume. It tells us how many days it would take to buy back all short shares.

Since Chris firmly believes the stock is going to move higher, these bears will start to scramble to cover soon. In fact, he says the stock could break up to $100 a share once short sellers cover and the stock rallies close to its 52-week high.

If the stock surges to $102 a share, which it very well could, then you’ve bagged an easy 10% profit.

When fundamentals and technicals come together, the result is usually a great result for your account.

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Source: Money Morning