MADISON, Wis. ( Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less 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 Ceres ( CERE), which skyrocketed higher by 77.2%; China Ming Yang Wind Power Group ( MY), which ripped higher by 10.2%; Pixelworks ( PXLW), which trended up by 8.4%; and National Bank of Greece ( NBG), which spiked higher by 8.7%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
One low-priced stock that recently soared higher was specialty pharmaceutical player Supernus Pharmaceuticals ( SUPN), which I highlighted in May 17's " 5 Stocks Setting Up to Break Out" at $5.85 a share. I mentioned then that SUPN has been uptrending strong for the last month, with shares consistently making higher lows and higher highs, which was bullish price action. That move had spiked SUPN back above its 50-day moving average, and it was quickly pushing the stock within range of triggering a major breakout trade. That breakout was set to trigger if SUPN managed to clear some near-term overhead resistance levels at $5.68 to $6.29 a share with high volume.Guess what happened? Shares of SUPN didn't wait long to trigger that breakout, since the stock took out those key resistance levels the following week with bullish upside volume flows. This stock continued to uptrend strong and the stock recently hit a high of $7.20 a share. That represents a gain of over 20% for anyone who jumped on this breakout play. The next big breakout trade for SUPN will now trigger if it clears $7.20 with solid volume. That move will set up SUPN to re-test or possibly take out its next major overhead resistance levels at $8 to its 200-day at $8.40 a share. Above $8.40 is a massive gap that started at $11 a share that could get filled, so I would continue to monitor this stock going forward. >>10 Tips for Trading Penny Stocks 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. 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. >>5 Hated Earnings Stocks That Deserve Your Love 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. >>Buy These 5 Cash-Rich Stocks to Triple Your Gains
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.