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TheStreet Open House

5 Stocks Under $10 Set to Soar

NovaGold Resources

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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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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