Another under-$10 stock in the medical equipment and supplies complex that looks poised for some decent upside is
(FONR - Get Report)
, which is engaged in the business of designing, manufacturing, selling and servicing magnetic resonance imaging scanners, which utilize MRI technology for the detection and diagnosis of human disease, abnormalities, other medical conditions and injuries. This stock has been skyrocketing so far in 2012, with shares up over 150%.
If you take a look at the chart for Fonar, you'll notice that this stock made a huge run in March and April after it broke out above $2.84 a share with high volume. That breakout set the stock off to the upside with shares tagging a high of $6.80 a share in a very short timeframe. Since hitting that high, shares of Fonar have pulled back to a recent low of $3.40 a share. That move pushed the stock back below its 50-day moving average of $3.92, but on Wednesday the stock recaptured that moving average after it closed up 13.4% to $4.30 a share with above-average volume.
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Market players should now look for long-biased trades in FONR if it can manage to trigger a break out trade above some near-term overhead resistance at $5.00 to $5.28 a share with high-volume. Look for volume on a sustained move or close above those levels that register near or well above its three-month average action of 390,967 shares. If that breakout triggers soon, then FONR could make a huge move back towards that recent high of $6.80 a share, and possibly take that high out.
If you're in the bull camp on FONR, then one could anticipate the breakout and look to buy this stock off any noticeable weakness. I would use a stop right below its 50-day
of $3.92 a share, or right around that recent low of $3.40 a share if you want to give it more room. If you buy off weakness, I would then add to any long positions once its clears $5 to $5.28 with high-volume.