One under-$10 stock that's worth watching here is power technology player American Superconductor (AMSC - Get Report). The bears have done a number on this equity in 2011, and shares are off by over 84%.
If you take a look at the chart for American Superconductor, you'll see that this stock has been doing nothing but trending lower since its July high of $9.15. The stock recently hit a low of $3.21 and has started to rebound to its current price of near $4.30 a share. Market players should now monitor AMSC for a breakout trade if a couple of key technical levels can be taken out to the upside in the coming days or weeks.
Those breakout levels worth watching are the 50-day moving average at $4.66 and some past overhead resistance at $4.79. Traders should watch for a high-volume move above those levels to trigger a potentially big move higher. Look for volume on the breakout that's tracking in close to or above its three-month average action of 1.3 million shares.>>Semiconductor Stocks Liked by Hedge Funds This stock has failed to make a sustained move above the 50-day in months, so if that does occur soon on high volume, I would consider it a bullish development. One could be a buyer of this stock once it takes out the 50-day and $4.79 on high-volume. Simply use a stop that's a few percentage points below the 50-day in case the breakout fails. Keep in mind that this is a heavily shorted name since the current short interest as a percentage of the float for AMSC is 30.3%. 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.