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5 Stocks Under $10 Set to Soar

Alphatec

One more under-$10 stock that's trading within range of triggering a major breakout trade is Alphatec (ATEC - Get Report), a medical technology company focused on the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders, with a focus on products that treat conditions that affect the aging spine. This stock is off to a slow start so far in 2012, with shares up just 6.5%.

If you take a look at the chart for Alphatec, you'll notice that this stock has been trending sideways for the last three months, with shares moving between $1.50 on the downside and $1.90 on the upside. Shares of ATECH have recently started to bounce strongly off its 50-day at $1.68 with heavy volume, and it's also starting to flirt with its 200-day at $1.86 a share. That move is quickly pushing ATEC within range of breaking out topside of its sideways trading pattern.

Traders should now look for long-biased trades in ATEC once it manages to break out above some past overhead resistance at $1.90 a share with high volume. Look for a sustained move or close above $1.90 with volume that registers near or above its three-month average action of 132,369 shares. If that breakout triggers soon, then ATEC will setup to re-test or possibly take out its next major overhead resistance levels at $2.20 to $2.40 a share, or possibly even $2.80 to $3.50 a share.

One could look to buy ATEC off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day around some near-term support at $1.68 a share. One could also buy off strength once ATEC clears $1.90 with high volume and then simply use a stop at around $1.75 a share. Keep in mind that any move above $1.86 will push ATEC back above its 200-day moving average, which is technically bullish price action.

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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