DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sod risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the large movers in the under-$10 complex from Wednesday, including One Horizon Group (OHGI), which exploded higher by 152%; Giga-tronics (GIGA), which ripped large by 61%; Inventergy Global (INVT), which spiked sharply higher by 36%; and Ntelos Holdings (NTLS), which soared big by 30.4%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.
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.
With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.
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Cardica
One under-$10 health care player that's starting to trend within range of triggering a near-term breakout trade is Cardica (CRDC - Get Report), which designs, manufactures and markets automated anastomotic systems for use by cardiac surgeons to perform coronary bypass surgery in the U.S. and internationally. This stock has been hammered lower by the sellers over the last six months, with shares down huge by 52%.
If you take a glance at the chart for Cardica, you'll see that this stock recently formed a double bottom chart pattern at 36 cents per share. That bottom is coming after shares of CRDC double topped at 65 cents per share and then plunged lower to that low of 36 cents per share. Shares of CRDC are now starting to trend within range of triggering a near-term breakout trade above some key overhead resistance levels.
Market players should now look for long-biased trades in CRDC if it manages to break out above some near-term overhead resistance levels at 42 to 44 cents per share and then above more resistance at 45 cents per 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 action 306,697 shares. If that breakout triggers soon, then CRDC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of 52 cents per share to 55 cents, or even 60 cents per share.
Traders can look to buy CRDC off weakness to anticipate that breakout and simply use a stop that sits right below that double bottom support level at 36 cents per share. One can also buy CRDC off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
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BioDelivery Sciences
Another under-$10 specialty pharmaceutical player that's quickly moving within range of triggering a big breakout trade is BioDelivery Sciences (BDSI - Get Report), which engages in the development and commercialization of pharmaceutical products principally in the areas of pain management and addiction. This stock has been slammed lower by the bears over the last three months, with shares down sharply by 44%.
Market players should now look for long-biased trades in BDSI if it manages to take out a key downtrend line that will trigger over $8.50 to $9 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action 1.11 million shares. If that breakout develops soon, then BDSI will set up to re-test or possibly take out its next major overhead resistance levels at $10 to $10.50 a share, or even $11 a share. Any high-volume move above $11 will then give BDSI a chance to re-fill some of its previous gap-down-day zone from March that started near $14 a share.
Traders can look to buy BDSI off weakness to anticipate that breakout and simply use a stop that sits right around Wednesday's intraday low of $7.79 or close to that 52-week low of $7.28 a share. One can also buy BDSI off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
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Oi
An under-$10 telecommunications player that's starting to move within range of triggering a big breakout trade is Oi (OIBR - Get Report), which provides integrated telecommunication services for residential customers and governmental agencies, as well as small, medium and large companies in Brazil. This stock has been beaten-down over the last three months, with shares off by 19.2%.
Traders should now look for long-biased trades in OIBR if it manages to break out above some key near-term overhead resistance levels at $2.05 to $2.20 a share and then above more resistance at $2.27 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 action of 2.76 million shares. If that breakout takes hold soon, then OIBR will set up to re-test or possibly take out its next major overhead resistance levels at $2.69 to $3 a share, or even $3.50 a share.
Traders can look to buy OIBR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $1.82 a share. One can also buy OIBR off strength once it starts to crack above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
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Ocean Power Technologies
Another under-$10 alternative energy player that's starting to trend within range of triggering a major breakout trade is Ocean Power Technologies (OPTT - Get Report), which develops and commercializes proprietary systems that generate electricity by harnessing the renewable energy of ocean waves primarily in the U.S., Europe, Asia and Australia. This stock has been in play with the bulls over the last three months, with shares sharply to the upside by 25.2%.
If you look at the chart for Ocean Power Technologies, you'll notice that this stock has been uptrending strong over the last two months, with shares moving higher from its low of 41 cents per share to its recent high of 70 cents per share. During that uptrend, shares of OPTT have been consistently making higher lows and higher highs, which is bullish technical price action. During that uptrend, shares of OPTT have held above its uptrend line that you can see on the chart, and it's bounced off that trend line each time it has been tested. Shares of OPTT are now starting to move within range of triggering a major breakout trade above some key near-term overhead resistance levels.
Market players should now look for long-biased trades in OPTT if it manages to take out some key near-term overhead resistance levels at 67 to 68 cents per share and then above more resistance at 70 cents per 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 133,211 shares. If that breakout develops soon, then OPTT will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of 83 cents per share to 90 cents, or even $1 to $1.20 a share.
Traders can look to buy OPTT off weakness to anticipate that breakout and simply use a stop that sits right around 57 to 56 cents or at its 50-day moving average of 54 cents per share. One can also buy OPTT off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
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eGain
One final under-$10 technology stock that's starting to trend within range of triggering a major breakout trade is eGain (EGAN), which provides cloud-based and on-site customer engagement software solutions. This stock has been destroyed by the sellers over the six months, with shares down big by 39.7%.
If you take a glance at the chart for eGain, you'll see that this stock spiked sharply higher on Wednesday right off some near-term support at $3 a share with monster upside volume flows. Volume on the day registered over 1.50 million shares, which is well above its three-month average action of 26,146 shares. This high-volume spike is now quickly pushing shares of EGAN within range of triggering a major breakout trade above a key downtrend line that dates back to February.
Traders should now look for long-biased trades in EGAN if it manages to break out above that key downtrend line that will trigger over $3.45 to $3.50 a share and then above more resistance at $3.57 to $3.62 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 action 26,146 shares. If that breakout gets going soon, then EGAN will set up to re-test or possibly take out its next major overhead resistance level at around $4.20 a share. Any high-volume move above $4.20 will then give EGAN a chance to re-fill some of its previous gap-down-day zone from last February that started at $5 a share.
Traders can look to buy EGAN off weakness to anticipate that breakout and simply use a stop that sits right around support at $3 a share or down by its new 52-week low of $2.82 a share. One can also buy EGAN off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
By Roberto Pedone
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