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5 Stocks Under $10 Setting Up to Trade Higher

Stocks in this article: ZNDNNKNDIAAUBONE

Zion Oil & Gas

One under-$10 stock that's nearing a breakout trade is Zion Oil & Gas (ZN), an initial stage oil and gas exploration company with oil and gas exploration in Israel. This stock is off to a hot start in 2012, with shares up over 45%.

If you take a look at the chart for Zion Oil & Gas, you'll notice that this stock just bounced right around its 50-day moving average of $2.43 on monster volume. Volume yesterday was 425,000 shares, and today it's already registered over 524,000 shares, which is well above its three-month average action 101.279 shares. This huge volume spike now puts shares of Zion Oil & Gas within range of triggering a major breakout soon.

>>10 Stocks Rallying as Oil Prices Surge

Traders should now watch ZN for a breakout trade if this stock can take out its 200-day moving average of $3.32 and then some past overhead resistance at $3.48 with volume. A sustained high-volume move and close over those levels should set this stock up to re-test some past resistance levels at $3.84 to $4.50, or potentially much higher.

If we get that action soon, I would play this breakout from the long side and simply use a stop right under the 200-day.

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