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5 Stocks Under $10 Setting Up to Soar

Applied Micro Circuits

Another under-$10 stock that's setting up for a big breakout and potential move higher is semiconductor maker Applied Micro Circuits (AMCC - Get Report). The sellers have been in control of this stock in 2011, and shares are off by over 30%. That said, the stock could quickly be changing its trend back towards the favor of the bulls if shares can break out in the near future.

If you take a look at the chart for Applied Micro Circuits, you'll notice that this stock had been basing and trading sideways since August between $4.70 and over $6 a share. Every time this stock traded down to near $5 or just under $5, the buyers swarmed in and supported the share price. Now the buyers have started to push this stock into breakout territory since its well above $6 and pushing towards its next significant overhead resistance level at $7.16 a share.

One could be a buyer of this stock once it sustains a move and close above $7.16 a share on strong volume. Look for volume that's tracking in close to or above its three-month average action of 1.01 million shares. Volume on Thursday (an up day) tagged 3.04 million shares, so look for this strong volume action to continue if AMCC takes out $7.16. Target a run back towards the 200-day moving average of $8.34, or potentially much higher if we get the breakout.

The current short interest as a percentage of the float for AMCC is notable at 6.5%. It's worth pointing out that the bears have increased their bets from the last reporting period by 3.3%, or by about 133,100 shares. If the breakout triggers, then we could see the bears continue to cover some of their bets and push this stock much higher.

To see more hot under-$10 stocks, including Alon USA Energy (ALJ), L&L Energy (LLEN) and Toreador Resources (TRLG), check out the Stocks Under-$10 Setting Up To Trade Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


Follow Stockpickr on Twitter and become a fan on Facebook.

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 and maintains the website, 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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