Take the Rexahn Pharmaceuticals Clues at Face Value (RNN)

With just a quick glance at a chart of Rexahn Pharmaceuticals, Inc. (NYSEMKT:RNN), it would be easy to conclude it's nothing but a volatile mess. When you take a step back and look at a long-term weekly chart of RNN, however, it starts to become clear that this small cap biopharma name is on the verge of a monster-sized breakout. First things first, however.

As was noted, RNN is a biotech name. Its claim to fame is a drug called Archexin ... a Phase 2 Akt1 inhibitor (cancer therapy) that's taking dead aim at pancreatic and ovarian cancer. The efficacy reports so far look pretty good, though any FDA approval is still years away. Then again, in the world of biotech, long timeframes don't always get in a stock's way.

Archexin isn't the only thing Rexahn Pharmaceuticals has going on, however. Another drug in its pipeline has also put the spotlight on the company of late... even if the market can't decide if it's a bullish or bearish spotlight. It's RX-3117 - a Phase 1 tumor therapy that was being developed with Teva Pharmaceuticals, though Teva dropped its option to co-develop the drug with RNN a few weeks ago.

That decision coincided with a publication of RX- 3117's preliminary results. Presumably Teva's decision to walk away from the partnership would mean the results weren't promising enough to continue on with the drug's development, but that's not necessarily the case. Teva may have bowed out just because it's trying to get focused with its pipeline and current portfolio, leaving Rexahn Pharmaceuticals, Inc. with a good drug to continue working on in addition to Archexin.

With all of that as the backdrop, this is a scenario where good news can be interpreted as bad, and bad news could be interpreted as good. Take all of it with a grain of salt. Ironically, the only thing you want to worry about right new isn't the news itself, but rather, a chart of RNN since the chart of this stock illustrates the ever-changing opinion of the stock and the constantly-changing opinion of all those stories about the company. See, the media comments on the stock based on superficial assumption and logic. The chart, however, tells you what people are doing with shares of Rexahn - the ultimate commitment to an opinion. In that light...

Though it's not quite there yet, RNN is knocking on the door of a huge breakout after months' worth of consolidation. Indeed, though it's been a slow-go so far, that uptrend looks to already be underway.  The horizontal support line at $0.29 is no longer necessary; Rexahn Pharmaceuticals has more recently found support at the 200-day moving average line (green), and even more recently than that it's found support at the 100-day line (gray).

While it may be a needless caution, newcomers to RNN might want to wait until a move above the ceiling at $0.67 before diving in; there's plenty of room for more upside above that point. Either way, there's a storm brewing... quietly.

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