Stock Quotes in this Article: ALSK, LIVE, MGT, PLX, AVL

 WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street where stocks tradingnear or under $10 a share don’t experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Gevo(GEVO), which skyrocketed higher by 30%; James River Coal (JRCC), which surged 27%;Medgenics (MGDN), which ripped higher by 25%; and ValueVision (VVTV), which closed up 17%. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
Gevo happens to be a name I recently flagged at around $5.40 a share as one of five potential breakout trades. Shares of GEVO hit a high of $9.44 on Wednesday after that breakout triggered in spades.
I’m not as eager to recommend investing long term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren’t great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.
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When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that’s secondary to the chart and volume patterns.
LiveDeal
One under-$10 name that looks poised for higher prices is LiveDeal (LIVE), which delivers local customer acquisition services for small and medium-sized businesses. It provides online marketing Internet directory services. This stock is off to an extremely hot start in 2012, with shares up over 70%.
If you take a look at the chart for LiveDeal, you’ll see that since April this stock has been uptrending strong, with shares soaring from a low of $3.87 to a recent high of $7.67 a share. During that uptrend, shares of LiveDeal have been mostly making higher lows and higher highs, which is bullishtechnical price action. That move has also just pushed this stock into breakout territory since shares took out some near-term overhead resistance on Wednesday at $6.90 to $6.95 a share with heavy volume. That move yesterday pushed the stock to a high of $7.67 and volume hit 217,600 shares, which is well above its three-month average volume.
Market players should now look for long-biased trades in LIVE if it can hold that breakout above $6.90 to $6.95, and once it takes out Wednesday’s high of $7.67 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 volume of 54,458 shares.
If we get that action soon, then LIVE should easily re-test and possibly take out its next significant overhead resistance level at $8.74 a share. In fact, this stock could easily hit $10 to $12 a share if we get a high-volume breakout above $7.67 and then $8.74 a share.
If you like the look of LIVE here, then you could buy this stock anytime its trending above $6.90 to $6.95, and simply use a stop that’s a few percentage points below those levels. You could also just buy it once it takes out $7.67 with high volume, and then simply use a stop at around $6.90 a share.
Another possible support zone to key off of is Wednesday’s low of $6.10 if you want to give it some more room for your stop.
Protalix Bio Therapeutics
Another under-$10 name that looks ready to break out here is Protalix Bio Therapeutics (PLX), a biopharmaceutical company focused on the development and commercialization of recombinant therapeutic proteins based on its ProCellEx protein expression system, ProCellEx. This stock is off to a bullish start in 2012, with shares up over 37%.
If you take a look at the chart for Protalix Bio Therapeutics, you’ll notice for the last six months, this stock has been uptrending strong, with shares soaring from a low of $4.78 to a recent high of $7.70 a share. During that sharp move higher, shares of Protalix Bio Therapeutics have mostly made higher lows and higher highs, which is bullish technical price action. That move has now pushed PLX within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in PLX if it can manage to trigger a near-term breakout trade above $6.80 to $6.95 a share with high volume. Look for a sustained move or close above those levels on volume that’s near or above its three-month average action of 858,880 shares. If we get that action soon, then PLX has a great chance of re-testing and possibly taking out its May high of $7.70 a share.
One could be a buyer of PLX off weakness to anticipate the breakout, and simply use a stop just below its 50-day moving average of $6.54 a share. One could also just buy off strength once PLX clears $6.80 to $6.95 with high-volume, and simply use as stop that’s a few percentage points below $6.95 a share.
If that breakout does hit and we see $7.70 get taken out with volume, then I would add to any long positions in PLX. This stock has a massive gap-down above $7.70 that could get filled. That would take PLX back towards $10 a share.
Avalon Rare Metals
An under-$10 stock in the metal mining complex that looks ready to skyrocket higher is Avalon Rare Metals (AVL), a Canada-based mineral exploration and development company. Avalon’s primary focus is on rare metals and minerals, including tin, lithium, tantalum, niobium, cesium, indium, gallium, zirconium and calcium feldspar. This stock is off to a weak start in 2012, with shares off by around 30%.
If you take a look at the chart for Avalon Rare Metals, you’ll notice that this stock was hit hard by the bears, with shares plunging from its March high of $3.16 to a recent low of $1.36 a share. During that monster move to the downside, shares of Avalon Rare Metals were consistently making lower highs and lower lows, which is bearish price action. That said, this stock has started to form a major bottoming pattern during the last two months, with buyers stepping in to defend the stock at around $1.36 to $1.40 a share. Now this stock is quickly moving within range of triggering a near-termbreakout trade.
Traders should now look for long-biased trades in AVL if it can manage to trigger a break out trade above some near-term overhead resistance at $1.80, and then above its 50-day moving average of $1.89 a share with high-volume. Look for volume on a sustained move or close above those levels that register near or above its three-month average action of 628,967 shares. If we get that action soon, then AVL could easily explode back towards its 200-day moving average of $2.75 a share in the near future.
If you’re in the bull camp on AVL, then one could anticipate the breakout and look to buy this stock off weakness and simply use a stop that’s a few percentage points below yesterday’s low of $1.57 a share. You could even go all the way down to $1.40 for a stop if we get a significant pullback. That said, I would rather buy off strength and get long once it takes out yesterday’s high of $1.72 a share, and then above $1.80 to $1.89 a share. If you buy off strength, then I would use a stop around $1.60 to $1.50 a share.
Alaska Communications Systems Group
One under-$10 name in the communications services complex that’s trading within range of a major breakout trade is Alaska Communications Systems Group (ALSK), which provides integrated communications services to consumer and business customers in and out of Alaska. This stock is off to a bearish start in 2012, with shares off by around 24%.
If you take a look at the chart for Alaska Communications Systems Group, you’ll notice that this stock dropped big from its March high of $3.67 to a recent low of $1.73 a share. During that slide lower, shares of Alaska Communications Systems Group consistently made lower highs and lower lows, which is bearish technical price action.
That said, once this stock hit $1.73 a share, it reversed its downtrend and has now started to uptrend, with shares making higher lows and higher highs. This move is now pushing the stock within range of triggering a major breakout trade.
Traders should now look for long-biased trades in ALSK if it can manage to trigger a break out above some near-term overhead resistance at $2.29 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 528,819 shares. If we get that action soon, then I would add to any long positions once ALSK triggers its next major breakout above some resistance levels at $2.62 to $2.66 a share. Target a potential run toward $3 to $3.39 a share if all of those levels get taken out with high volume.
If you’re bullish on ALSK, then one could buy off weakness and simply use a stop at around $2 a share. I don’t love that idea though since it would mean you’re letting the stock pullback well below its 50-day moving average of $2.21 a share. I would rather just get long off strength as long as ALSK is trending above $2.21, or once it triggers that breakout over $2.29 a share. If you buy off strength, simply use a tight stop a few percentage points below your entry.
MGT Capital Investments
An under-$10 name in the technology complex that’s trading very close to triggering a major breakout is MGT Capital Investments (MGT), which, together with its subsidiaries, operates as a medical technology company focusing on medical imaging software development and medical hardware devices.
If you take a look at the chart for MGT Capital Investments, you’ll see that this stock has been uptreending very strong late-March, since this stock has skyrocketed from a low of $1.31 to a recent high of $6.50 a share. During that monster move to the upside, shares of MGT have consistently made higher lows and higher highs, which is bullish technical price action. This stock also just started to trigger a near-term breakout trade Wednesday once it took out some resistance at $4.98 with heavy volume. That move is now pushing MGT within range of triggering another major breakout trade.
Market players should now look for long-biased trades in MGT if it can manage to trigger a break out above some near-term overhead resistance at $6.45 to $6.50 a share with high volume. Look for volume off a sustained move or close above those levels that hits near or above its three-month average action of 42,402 shares. If we get that action soon, then MGT could easily be on its way towards $10 to $13 a share.
I would look to buy MGT off any weakness and simply use a stop right around Wednesday’s low of $4.05 a share. You could also just buy off strength as long as MGT is trending above $4.98 a share, and then add once it takes out $6.45 to $6.50 a share with high volume. Simply use a stop that’s a few percentage points below $4.98 if you buy off strength.
To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up to Explode portfolio on Stockpickr.
By Roberto Pedone
Senior Contributor
06/21/12 - 12:17 PM EDT
-- Written by Roberto Pedone in Winderemere, Fla.