DELAFIELD, Wis. (Stockpickr) -- 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 sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the big movers in the under-$10 complex on Monday, including S&W Seed (SANW) , which is ripping higher by 28%; Orexigen Therapeutics (OREX) , which is jumping higher by 20%; Uranium Resources (URRE) , which is surging higher by 19%; and American Eagle Energy (AMZG) , which is moving to the upside by 17%. 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.
Penn Virginia
If you take a glance at the chart for Penn Virginia, you'll see that this stock has been trying to carve out a bottoming chart pattern over the last few weeks, with shares finding buying interest each time it has pulled back to around $7 a share. Those dips have been bought so far, since shares of PVA are starting to make higher lows after it tagged a new 52-week low of $6.75 a share. This stock is now starting to trend higher off those near-term support levels and it's quickly moving within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in PVA if it manages to break out above some near-term overhead resistance levels at $8.99 to $9.18 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 3 million shares. If that breakout hits soon, then PVA will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $10.70 to $12 a share.
Traders can look to buy PVA off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $7.43 to $7 a share. One can also buy PVA 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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Millennial Media
Another under-$10 marketing services player that's starting to trend within range of triggering a big breakout trade is Millennial Media(MM) , which provides mobile advertising solutions to advertisers and developers in the U.S. and internationally. This stock has been destroyed by the bears so far in 2014, with shares down huge by 74%.
If you take a look at the chart for Millennial Media, you'll notice that this stock has been attempting to carve out a major bottoming chart pattern over the last month and change, with shares finding buying interest each time it has pulled back toward $1.60 a share or just below that level. This stock is now starting to spike higher off those support levels and it's quickly pushing within range of triggering a big breakout trade above some key near-term overhead resistance levels.
Market players should now look for long-biased trades in MM if it manages to break out above its 50-day moving average of $1.93 a share to some more near-term overhead resistance levels at $2.09 to $2.11 a share and then $2.24 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 1.61 million shares. If that breakout triggers soon, then MM will set up to re-test or possibly take out its next major overhead resistance levels at $2.60 to $3.25 a share, or even $3.50 to $4 a share.
Traders can look to buy MM off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $1.62 to its 52-week low at $1.56 a share. One can also buy MM 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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Brightcove
One under-$10 technology player that's starting to move within range of triggering a major breakout trade is Brightcove (BCOV) , which provides cloud-based services for video. This stock has been decimated by the bears in 2014, with shares down sharply by 51%.
If you take a glance at the chart for Brightcove, you'll notice that this stock recently formed a double bottom chart pattern at $5.06 to $5.07 a share. Following that bottom, shares of BCOV gapped sharply higher and broke out a few weeks ago above some near-term support levels and back above its 50-day moving average. Shares of BCOV tagged a recent high of $6.93 a share, before pulling back to just above its 50-day at $6.25 a share. This stock is now starting to rebound higher once again and it's quickly approaching a major breakout trade.
Traders should now look for long-biased trades in BCOV if it manages to break out above some near-term overhead resistance levels at $6.93 to its gap-down-day high from July at around $7 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 volume of 338,032 shares. If that breakout develops soon, then BCOV will set up to re-fill some of its previous gap-down-day zone from July that started at $10.35 a share.
Traders can look to buy BCOV off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $6.25 a share or near its 50-day moving average of $5.80 a share. One can also buy BCOV 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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A10 Networks
Another under-$10 technology player that's starting to move within range of triggering a big breakout trade is A10 Networks (ATEN) , which provides software based application networking solutions in the U.S., Japan, and internationally. This stock has been hammered by the bears so far in 2014, with shares down sharply by 74%.
Market players should now look for long-biased trades in ATEN if it manages to break out above some near-term overhead resistance levels at $4.63 to $5 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 449,655 shares. If that breakout materializes soon, then ATEN will set up to re-fill some of its previous gap-down-day zone from October that started just above $8 a share.
Traders can look to buy ATEN off weakness to anticipate that breakout and simply use a stop that sits right below those double bottom support levels. One can also buy ATEN 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.
One final under-$10 basic materials player that looks ready for a potentially explosive move higher is Centrus Energy (LEU) , which supplies low enriched uranium (hence, "LEU") for commercial nuclear power plants in the U.S., Japan, and internationally. This stock has been destroyed by the sellers over the last three months, with shares down large by 35%.
If you take a glance at the chart for Centrus Energy, you'll notice that this stock has been trying to carve out a bottom over the last month and change, with shares finding some buying interest each time it has pulled back below $7 a share. Shares of LEU are now starting to bounce modestly higher off its recent 52-week low of $5.81 a share. That bounce is quickly pushing shares of LEU within range of triggering an explosive move to the upside.
Traders should now look for long-biased trades in LEU if it manages to break out above some near-term overhead resistance levels at $7.25 to $7.75 a share and then above $8.72 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 124,278 shares. If that breakout hits soon, then LEU will set up re-test or possibly take out its next major overhead resistance levels at $10 to $12 a share.
Traders can look to buy LEU off weakness to anticipate that breakout and simply use a stop that sits near its 52-week low of $5.81 a share. One can also buy LEU 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.
To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr.
-- Written by Roberto Pedone
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