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5 Stocks Under $10 Setting Up to Soar


An name under-$10 name in the communications services complex that's worth watching is Paetec (PAET). This stock has been off to a hot start this year, with shares up over 40% so far. This company just reported third-quarter earnings that showed a 31% jump in revenue growth year over year to $536.3 million. Despite those strong results, the stock is trading off by 7% at last check.

If you take a look at the chart for Paetec, you'll notice that this stock has been in a strong uptrend for the past six months, where shares have been making mostly higher highs and higher lows. Before today's down move, the stock was approaching a major breakout above $5.71 to $5.84 a share. That said, the stock has now dropped back below its 50-day moving average of $5.50 a share. Shares of Paetec are now approaching some key support zones at $5.25 and then near $5 a share, if that $5.25 support fails to hold.

>>5 Breakout Trades in This Crazy Market

I would suggest putting this stock on your trading radar to see if those support zones hold, or to monitor for a high volume move back above the 50-day moving average. Paetec's three-month average volume is 2.29 million shares, so any move above the 50-day with volume near or above that level is what you should watch for.

If the stock can find solid buying support near $5.25 or $5 a share, then one could be a buyer with a tight mental stop just below either entry. If you like to play strength, then I would wait until this stock makes a high volume move back above its 50-day. I would add to any long position if you see this stock break out over $5.84 with heavy volume.
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