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TheStreet Open House

5 Stocks Under $10 Setting Up to Soar

Cytori Therapeutics

One under-$10 stock that's worth keeping an eye on is medical products and device maker for regenerative medicine Cytori Therapeutics (CYTX). This stock has been hammered by the sellers in 2011, with shares off by over 43%.

If you take a look at the chart for Cytori, you'll notice that this stock has been downtrending from its July high of $5.72 to its recent low of $2.32 a share. After hitting that low, the stock has rebounded and started to print higher lows, which could be signaling a bullish trend change. As long as this stock continues to make higher lows, then traders should watch CYTX for a breakout in the near-term.

Market players should look for a breakout to trigger if CYTX can clear and close above its 50-day moving average of $3.10 a share on solid volume. Look for volume that's tracking in close to or above its three-month average action of 432,400 shares. If the stock can close over its 50-day convincingly, then watch for a bigger breakout to trigger once it moves above $3.30 to $3.50 with volume.

One could be a buyer of this stock once it clears the 50-day with volume. If we get that move, I would then add to any long position once the stock takes out $3.30 a share with volume. Target a run back towards 4.50 a share, or possibly much higher if the bulls gain full control of this stock.

Keep in mind that this is a heavily shorted name since the current short interest as a percentage of the float for CYTX is 18%. Any near-term breakout could trigger a monster short-squeeze, so make sure to watch for any high volume spikes above that 50-day in the coming days or weeks.

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