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TheStreet Open House

5 Stocks Under $10 With Big Upside Potential

GMX Resources

One final under-$10 stock that's starting to trigger a breakout trade today is GMX Resources (GMXR), a pure-play independent oil and natural gas exploration and production company. This stock has been a big winner for the short-sellers in 2011, with shares off by around 70%.

If you take a look at the chart for GMX Resources, you'll notice that this stock has plunged from its July high near $5.36 to a recent low of $1.15 a share. After printing that low, the stock has started to rebound sharply and is now starting to break out on high volume. At last check, the stock is soaring 19% with over 2.4 million shares traded. That volume is well above its three-month average action of 1.53 million shares.

>>3 Oil Stocks to Buy

Traders should now watch GMXR to sustain a breakout and close above $1.50 to $1.56 on high volume. The volume is already there, so just watch the close today to see if GMXR finishes near its daily highs and above $1.56. This high-volume breakout today bodes well for much higher prices for this stock in the coming days or weeks. The next major breakout levels sit at $1.73 and then its 200-day moving average of $1.98 a share.

You could be a buyer of this stock off any noticeable weakness and simply use a mental stop at around $1.50 in case the breakout fails. One could also just buy strength and get long once $1.73 is taken out to the upside with high-volume. Use a mental stop a few percentage points below that level if you buy off strength. I would then add to any long positions once GMXR moves back above its 200-day at $1.98 with volume. Target a run back towards its next significant overhead resistance level at $2.62 if the buyers continue to step up.

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