These under-$10 stocks are within range of triggering breakout trades.
There isn't a day that goes by on Wall Street when certain stocks trading for 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 sod risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the monster movers to the upside in the under-$10 complex from Wednesday, including MoSys (MOSY) , which ripped higher by 41.8%; Violin Memory(VMEM) , which jumped by 32.3%; Aegerion Pharmaceuticals (AEGR) , which soared by 28.5%; and MGT Capital Investments (MGT) , which spiked big by 27.6%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
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Low-priced stocks are something that I tweet about on a regular basis. These are also the exact type of stocks that I love to trade and alert to my subscribers in real-time. 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 stocks, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 stocks 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.
Golden Minerals
One under-$10 basic materials player that's starting to trend within range of triggering a near-term breakout trade is Golden Minerals (AUMN) , which engages in mining, construction and exploration of mineral properties. This stock has been in play with the bulls over the last six months, with shares exploding higher by 142.4%.
Market players should now look for long-biased trades in shares of Golden Minerals if it manages to break out above its 50-day moving average of 55 cents per share and then above more near-term overhead resistance levels at 56 to 61 cents per 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 of 598,542 shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at 75 to 87 cents, or even its 52-week high of 94 cents per share.
Traders can look to buy this stock off weakness to anticipate that breakout and simply use a stop that sits right around its 20-day moving average of 41 cents per share. One can also buy shares of Golden Minerals 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
InvenSense
An under-$10 technology stock that's starting to trend within range of triggering a near-term breakout trade is InvenSense (INVN) , which designs, develops, manufactures, markets and sells sensor systems on a chip in the U.S., China, Taiwan, South Korea, Japan, France, Canada, Slovakia and Italy. This stock has been smacked lower by the sellers over the last six months, with shares down by 38.2%.
If you take a look at the chart for InvenSense, you'll notice that this stock spiked notably higher on Wednesday right off its 20-day moving average of $6.17 a share with strong upside volume flows. Volume for that trading session registered over 1.50 million shares, which is well above its three-month average action of 1.19 million shares. That high-volume spike to the upside is now quickly pushing shares of InvenSense 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 InvenSense if it manages to break out above some near-term overhead resistance levels at $6.50 to $6.60 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 of 1.19 million shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $7 to $7.50, or even $8 to $8.66 a share.
Traders can look to buy this stock off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $5.97 a share. One can also buy shares of InvenSense 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.
W&T Offshore
One under-$10 energy player that's starting to spike within range of triggering a near-term breakout trade is W&T Offshore (WTI) , which producers, acquires, explores for and develops oil and natural gas properties in the Gulf of Mexico. This stock has been under selling pressure over the last six months, with shares falling by 24.8%.
If you take a glance at the chart for W&T Offshore, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $1.98 to $2 a share over the last month and change. Following that potential bottom, shares of W&T Offshore have now started to spike higher back above its 20-day moving average of $2.11 a share, and it's beginning to trend within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in W&T Offshore if it manages to break out above some near-term overhead resistance levels at $ $2.22 to $2.23 a share and then above $2.35 to $2.45 a share with volume that hits near or above its three-month average action of 1.69 million shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $2.60 to $2.75, or even $3 to $3.25 a share.
Traders can look to buy this stock off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels or around more near-term support levels at $1.93 to $1.91 a share. One can also buy shares of W&T Offshore off strength once it starts to move back above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Neovasc
Another under-$10 stock that's starting to spike within range of triggering a big breakout trade is Neovasc (NVCN) , which develops, manufactures and markets cardiovascular products worldwide. This stock has been destroyed by the sellers last six months, with shares dropping sharply by 87.6%.
Market players should now look for long-biased trades in Neovasc if it manages to break out above some near-term overhead resistance levels at Wednesday's intraday high of 47 cents per share to more near-term resistance around 50 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 of 641,570 shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at 58 to 59 cents per share. Any high-volume move above those levels will then give this stock a chance to tag its next major overhead resistance level at its gap-down-day high from May at 89 cents per share.
Traders can look to buy Neovasc off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels. One can also buy this stock 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.
Chiasma
One final stock that's starting to trend within range of triggering a big breakout trade isChiasma (CHMA) , which focuses on developing and commercializing oral forms of therapies for patients suffering from orphan diseases. This stock has been destroyed by the bears over the last six months, with shares plunging lower by 88.3%.
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Traders should now look for long-biased trades in Chiasma if it manages to break out above some key near-term overhead resistance levels at Wednesday's intraday high of $2.68 a share and then above more key resistance at $2.75 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 of 569,364 shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $2.94 to its 20-day moving average of $3.06, or even $3.35 to $3.40. Any high-volume move above $3.40 will then give this stock a chance to tag its next major overhead resistance levels at $3.66 to around $4 a share.
Traders can look to buy shares of Chiasma off weakness to anticipate that breakout and simply use a stop that sits right below its new 52-week low of $2.50 a share. One can also buy this stock 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.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
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