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5 Stocks Under $10 Setting Up to Trade Higher

Stocks in this article: PRMWAVNRSCOKORNMDWANX

Orion Marine Group

If you're looking for a under-$10 stock in the construction services sector, check out Orion Marine Group (ORN), a marine specialty contractor serving the heavy civil marine infrastructure market that provides a range of marine construction services on, over and under the water along the Gulf Coast and the Atlantic Seaboard and in the Caribbean Basin. The bears have done a number on this stock so far in 2011, with shares off by over 40%.

If you take a look at the chart for Orion Marine Group, you'll see that this stock has been in a nasty slide lower since it topped out at $10.80 a share back in May. The stock also recently gapped down big in just a few trading sessions from over $8 a share to a recent low of $5.51 a share. That said, since hitting the $5.51 low, the stock has been forming a basing pattern between $5.50 and $6.70 a share. The stock has also started to print higher lows and some higher highs which could be signaling a bullish trend change.

Market players should now watch for a breakout trade to alert with a move above $6.70 a share on strong volume. A sustained move above that level on volume that's tracking in close to or above 339,000 shares would be bullish for this stock.

You could buy this stock on any notable weakness in anticipation of the breakout, or you could just wait for the breakout and then get long. I would use a stop at around $6 a share if you buy this name on weakness. I would add to any long position if it then trades above its 50-day moving average of $7.33 a share with volume. This stock could run big if the breakout hits, since the next significant overhead resistance levels won't be reached until $9 to $10 a share.

This stock has a rather high short interest as a percentage of its float, at around 10.4%. If the breakout triggers here for ORN then this stock could see a large short-squeeze that forces the bears to move in and cover and buy back the stock.

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