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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Under $10 Setting Up to Trade Higher

SinoCoking Coal and Coke

An under-$10 stock in the energy complex that looks technically ready to surge higher is SinoCoking Coal and Coke (SCOK), which operates as a coal and coke producer in the People's Republic of China. This stock has been beaten down huge so far in 2011, with shares off by over 60%.

If you take a look at the chart for SinoCoking, you'll see that this stock has been stuck in a nasty downtrend since the stock of the year after it printed a higher of $14.37 a share. During that downtrend, the stock has done nothing but flash bearish technical signals, with shares making lower highs and lower lows repeatedly. That said, the stock just formed a perfect triple-bottom chart pattern at $3.60 a share and it has now started to move above its 50-day moving average of $4.34 a share.

Related: 7 Mining Stocks to Watch

Market players should watch for a breakout trade if SCOK can manage to trade above some near-term overhead resistance at $5 and then $5.54 a share on big volume. A sustained move above those levels on volume that's tracking in close to or well above its three-month average action of 96,000 shares would be bullish for the stock.

You could buy this stock on any weakness and anticipate the breakout, or just wait for the breakout and then load up on some shares. I would use a stop just below the 50-day moving average of $4.34 a share in case this stock isn't ready to move up. If we do get the breakout, then this stock could easily make a monster spike back towards its 200-day moving average of $7.59 a share or possibly higher. I like that volume during the past two trading sessions leading into today was north of 136,000 shares.

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