Biotech stocks have been breaking to new highs all over the market. Here are just a few:

• Esperion Therapeutics (NASDAQ: ESPR) broke to a new high last week and skyrocketed yesterday.
• Ampio Pharmaceuticals (NASDAQ: AMPE) bolted higher last week and touched a new high today.
• Jazz Pharmaceuticals (NASDAQ: JAZZ) just hit a new high today as well.

The list goes on and on. Whether it is Receptos (NASDAQ: RCPT), Newlink (NASDAQ: NLNK), Biogen Idec (NASDAQ: BIIB) or the stocks listed above, biotechs are hitting new highs all the time.

Investors should be ready for the next breakout, and one biotech name that’s getting close is Intercept.

Intercept Pharmaceuticals is a development stage biopharmaceutical company that focuses on the discovery, development, and commercialization of novel therapeutics to treat chronic liver and intestinal diseases utilizing its proprietary bile acid chemistry.

It primarily develops a bile acid analog that completed Phase III clinical trial for the treatment of primary biliary cirrhosis, is in Phase III clinical trial for the treatment of nonalcoholic steatohepatitis, as well as Phase 2 clinical trial for primary sclerosing cholangitis.

Review the 1-year chart of Intercept with the added notations:

Intercept experienced a rough decline in March and April of last year. The stock then traded sideways for a several months before continuing lower during the fall.

The first sign that Intercept might finally be ready to rally was on the break through of its trendline resistance. That break led to 60 percent rise all the way back to the key resistance level at $300.

The $300 resistance has been tested multiple times, thus a break through it should mean that the stock is finally ready to run back to new highs.

Investors should watch for a possible breakout on Intercept. The stock closed yesterday at $280.11/share.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.