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

5 Stocks Under $10 Set to Soar Higher

Stocks in this article: DARA QRM ALC AVNR TEAR RGEN

Avanir Pharmaceuticals

Another under-$10 name in the biotechnology and drugs complex that's trading very close to triggering a near-term breakout trade is Avanir Pharmaceuticals (AVNR). This is a pharmaceutical company focused on developing and commercializing therapeutic products for the treatment of central nervous system disorders. This stock has is off to a hot start so far in 2012, with shares up over 50%.

If you take a look at the chart for Avanir Pharmaceuticals, you'll notice that this stock was hammered by the sellers off its July high of $4.05 to its recent low of $2.76 a share. During that sharp move lower, shares of AVNR were consistently making lower highs and lower lows, which is bearish technical price action. That said, during the last month shares of AVNR have formed a triple bottom chart pattern at $2.76, $2.78 and $2.80 a share. This stock is also now setting up to trigger a near-term breakout trade, as it starts to make higher highs.

Market players should look for long-biased trades in AVNR if it can manage to trigger a break out above some near-term overhead resistance levels at $3.14 to $3.20 a share with high volume. Look for volume off a sustained move or close above those levels that tracks in close to or near its three-month average action of 1.2 million shares. If that breakout triggers soon, then AVNR will have a great chance of soaring and possibly re-testing or taking out its July high of $4.05 a share.

Traders can look to get long AVNR off weakness, and simply use a stop near its 200-day moving average of $2.89 a share, or down near $2.80 a share. One could also get long once AVNR clears $3.14 to $3.20 with high volume, and then simply use a stop that sits just below $3 a share. Keep in mind that any high-volume move above $3.20 will mean that AVNR has cleared its 50-day moving average, which is bullish technical price action.

This stock has big potential for a major move if it breaks out soon since it also happens to be a favorite of the short-sellers. The current short interest as a percentage of the float for AVNR is extremely high at 15.6%. If AVNR breaks out soon with volume, then we could easily see a monster short-squeeze develop, so be ready.

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