Yesterday saw the overall market finish slightly in the red territory.

The healthcare industry displayed relative strength to the market yesterday, specifically stocks within the biotech sector.

IBB closed the day up close to 1% and above critical support. XLV closed the day up 0.15%.

So it doesn’t come as a surprise that yesterday’s runner is a medical devices company. Of course, I am talking about the stock that closed on top of the Top Gainers list and traded well over 300M shares.

Today I’m going to run down the setup with you, key levels traders were watching, how it unfolded, and what’s next for this tiny stock that trades under two bucks.

ReWalk Robotics (NASD: RWLK)

RWLK was yesterday’s flavor of the day by quite some margin. The stock closed the day up 99.23% and traded 320M shares. Truly staggering numbers!

What is RWLK?

ReWalk is a medical device company. The company, according to Yahoo, designs, develops and commercializes wearable robotic exoskeletons for individuals with mobility impairments or other medical conditions in Israel, the United States, Europe, the Asia-Pacific, Latin America, and Africa.

Before yesterday’s surge higher, the stock had spent the better part of the year asleep. Since topping out at $6 in February, the stock has slowly drifted lower and traded minimal volume, resulting in the average volume for the stock being only 410K.

Market Cap: 111.27M

Float: 45.43M

Average Volume: 410K

Short Interest: 0.5%

No catalyst or press release caused the stock to trade higher yesterday.

This is a current theme playing out in the market right now, with low-priced stocks. The most notable low-priced stock to move without a significant catalyst has been CEI.

Instead, the unusual volume, volatility, and chart pattern have been the driving force behind the momentum. 

After yesterday’s impressive gain, the stock is now up 107.20% on the week and 96.21% year to date.

The Technical Breakout

The gap up yesterday saw shares of RWLK break above the resistance of the downtrend. This gap higher signaled a significant trend break, which likely resulted in added confidence for the bulls who were already long the stock or looking to get long.

Key Levels from Yesterday

The action yesterday has provided critical levels of resistance and support going forward.

$1.50 is the opening price from yesterday and also represents the break of the downward trend. Below this price, anyone who bought the stock on the gap up will be underwater.

$1.95 – $2 is yesterday’s pre-market resistance, which later turned into key intraday support. This is the most crucial level of support from yesterday.

$2.30 is a key level of intraday and after-hours resistance.

$2.60 is resistance from the close, and $2.68 is the high of the day.

What’s Next for the Stock?

As the stock advances, the bulls would not want to see the stock fail to hold above critical support of $1.95 – $2. A move below this level might signal a potential shift in momentum. 

If the stock breaks below $2 and heads towards yesterday’s opening price, the bulls might quickly lose confidence in the long thesis. 

Alternatively, confidence might quickly grow if the stock continues to trade abnormal volume and base above $2 and then hold above the $2.30 resistance. The bulls could be looking at the $2.60 level as the next target area.

If the stock can continue its run higher, then the higher time frame resistance levels of $3 and $3.50 might become the next target areas.

As the stock made an enormous move higher yesterday and traded the float over seven times, another possibility is that the stock might need to rest before attempting to move higher. If this were to happen, the bulls might want to see the stock consolidate between crucial support and resistance.