One more under-$10 name that could be setting up for higher prices is NovaGold Resources (NG), a precious metals company engaged in the exploration and development of mineral properties in North America. This stock is off to a bearish start in 2012, with shares off by over 50%.
If you take a look at the chart for NovaGold Resources, you'll see that this stock has been hammered by the bears, with shares plunging during the last six months from over $8 to its recent low of $3.61 a share. During that large slide lower, shares of NG have mostly been making lower highs and lower lows, which is bearish technical price action. This stock also just gapped down big a few weeks ago from $5.55 to under $4 a share. Following that gap down, shares of NG have now started to bounce off some near-term support at $3.66 a share. That move is now pushing the stock within range of a possible breakout trade.
Traders should now look for long-biased trades in NG once it manages to trigger a breakout trade above its gap down day high of $4.29 a share with high volume. Look for a sustained move or close above $4.29 a share with volume that hits near or above its three-month average action of 4 million shares. If we get that action soon, then look for NG to quickly fill some of that previous gap. It's possible that NG could bounce back toward its 50-day moving average of $5.33 a share, or possibly even higher if we see large volume flow in once NG takes out $4.29 a share.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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