Another under-$10 name in the technology complex that's trading very close to triggering a breakout trade is Marchex (MCHX), a digital call advertising and small business solutions company. The company offers products, services and technologies that enable advertisers to reach local consumers across online, mobile and offline sources. This stock has been hammered by the bears so far in 2012, with shares off by over 35%.
If you take a look at the chart for Marchex, you'll notice that this stock has been stuck in range for the past two months, with shares trending between $3.12 on the downside and $3.60 to $3.68 on the upside. Shares of Marchex recently took out its 50-day moving average of $3.41 a share, and the stock has moved above that $3.60 to $3.68 resistance area. That move has now pushed MCHX within range of triggering a near-term breakout trade.
Market players should now look for long-biased trades in MCHX if it can manage to trigger a breakout above some near-term overhead resistance at $3.88 a share with high-volume. Look for volume off a sustained move or close above $3.88 that registers near or above its three-month average action of 153,421 shares. If we get that action soon, then MCHX could easily rip significantly higher towards $4.50 to $4.85 a share, or possibly envy its 200-day moving average of $5.29 a share.One could buy MCHX off strength on a move over $3.88 with volume, and simply use a stop that's a few percentage points below that $3.60 to $3.68 breakout level. You could also buy off weakness and simply use a stop just below its 50-day moving average of $3.41 a share. If you buy off weakness around the 50-day at $3.41, then look to add once $3.88 is taken out with volume. Keep in mind that MCHX has great short-squeeze potential, since the current short interest as a percentage of the float is pretty high at 12.2%. This stock also has a relatively low float of just 17.37 million shares. This is the perfect combination for a big-time short-squeeze if that breakout triggers soon. To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up To Explode portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
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