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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Under $10 Ready to Soar Higher

BioFuel Energy

One under-$10 name in the chemical manufacturing complex that looks to trigger a major breakout trade is BioFuel Energy (BIOF), which produces and sells ethanol and its co-products (primarily distillers grain), through two ethanol production facilities located in Nebraska and Minnesota. This stock has been crushed by the sellers during 2012, with shares off by over 75%.

If you take a look at the chart for BioFuel Energy, you'll notice that this stock has been destroyed by the sellers during the last six months, with shares dropping from over $18.40 to a recent low of $2.07 a share. During that monster move lower, shares of BioFuel Energy have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to reverse that downtrend during the last few weeks, and some large upside volume spikes are hitting the chart.

>>5 Volatile Stocks to Buy More Of

Traders should now look for long-biased trades in BIOF if it can manage to trigger a breakout trade above some near-term overhead resistance at $3.39 to $3.75 a share with high volume. Look for volume on that breakout that hits near or above its three-month average action of 45,033 shares. If we get that move, then BIOF will have a great chance of taking out its 50-day moving average of $4.24 a share, which would be more bullish technical action. If that 50-day gets taken out with volume, then look for BIOF to make a run at $5 to $6 a share.

If you're bullish on BIOF, then one could look to buy this stock off any weakness, and simply use a stop just below some near-term support at $3 to $2.80 a share. One could also just buy off strength once BIOF clears $3.39 to $3.50 a share with high volume. Traders can then look to add to any long positions once BIOF takes out $3.75 to $4.24 with high volume.

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