One more under-$10 stock that's setting up for a big breakout and potential monster move higher clinical documentation solutions provider to the health care sector
. This stock has traded virtually flat in 2011, with shares off by just 0.33%. That said, if a near-term technical breakout triggers, then we could see a big pop that will put flat performance in the rearview mirror.
If you take a look at the chart for MedQuist, you'll notice that this stock was hammered from its August high of $13.77 to a recent low of $6.21 a share. After printing that low, the stock has rebounded sharply to its current price of around $9 a share. During that rebound, the stock has started to make higher lows and higher highs, which is bullish price action for any stock. The stock now sets up for a big breakout if some past overhead resistance can be taken out to the upside.
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Traders should monitor MEDH for a breakout if it can clear $9.08 to $9.65 a share on high volume. Look for volume that's tracking in close to or above its three-month average action of 255,530 shares. Volume today has already surpassed 320,000 shares, and the stock is moving up over 4% to $9 a share at last check. If we do see a sustained move and close above those resistance levels soon, then this stock could easily run make a 20% to 30% pop from current levels.
One could buy this stock once it breaks out over $9.08 with strong volume. I would simply use a mental stop that's a few percentage points below your breakout entry price. You could also anticipate the breakout and buy off any weakness back towards $8.50, with a mental stop just below that level.
The current short interest as a percentage of the float for MEDH is notable at 5.9%. That's not a huge short interest, but it's more than enough to spark a big short-squeeze if we do get that breakout in the coming days or weeks.
To see more hot under-$10 stocks, inclusing
Aegean Marine Petroleum Network
, 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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