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TheStreet Open House

5 Stocks Under $10 With Big Upside Potential

Stock quotes in this article: OCZ, DNN, CMC, SWFT, NEOP

Neoprobe

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One more under-$10 stock that's setting up to trend higher is Neoprobe (NEOP), a biomedical company that develops and commercializes oncology products. This stock has been struggling so far this year, with shares off by around 18%.

This company announced on Wednesday night that its New Drug Application for Lymphoseek has been accepted for review by the U.S. Food and Drug Administration. Lymphoseek is a new lymph-node mapping agent used to determine the spread of cancer. This news has spiked that stock over 6% today at last check on heavy volume.

If you take a look at the chart for Neoprobe, you'll notice that this stock is quickly approaching a big breakout if it can manage to trade above a key descending trend line that started back in June at around $3.90 a share. Look for this stock to trigger that conformation by trading above $3.25 a share with strong volume. Volume so far today is tracking in very strong with over 1.1 million shares traded, which is well above its three-month average volume of 777,000 shares.

If we do see a breakout above that key descending trend line, then this stock is likely to re-test its 200-day moving average of $3.48 a share. Once we get above that area with volume, then I like this stocks chances to make a monster move back towards $5.50 a share or possibly even higher.

One could be a buyer of this stock on any weakness and anticipate the breakout, or simply wait for the breakout and buy off strength. I would simply use a mental stop just below some major support at $2.75 a share if you buy off weakness. If you enter off of strength, I would get long on the break above $3.25 or above $3.50 with a mental stop a few percentage points below either entry point.

This is another heavily shorted stock with around 13% of the tradable float currently sold short by the bears. If you see some of those overhead resistance levels I mentioned start to get taken out to the upside, then look for a big short squeeze to kick off for NEOP.

>>10 Most Shorted Stocks in Biotech

To see more hot under-$10 stocks, including Ur-Energy (URG), Adventrx Pharmaceuticals (ANX) and Harvard Bioscience (HBIO), check out the Stocks Under-$10 Setting Up to Trade Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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