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

5 Stocks Under $10 Set to Soar

Catalyst Pharmaceutical Partners

One more under-$10 stock that's trading within range of triggering a near-term breakout trade is Catalyst Pharmaceutical Partners (CPRX), which is focused on the development and commercialization of prescription drugs targeting addiction diseases and disorders of the central nervous system with a focus on the treatment of addiction and epilepsy. This stock has been on fire so far in 2012, with shares up sharply by 33%.

If you take a look at the chart for Catalyst Pharmaceutical Partners, you'll notice that this stock recently pulled back sharply off its high of $2.27 to a low of $1.40 a share. That pullback included a gap down in price and few daily spikes below its 50-day moving average. Following that low, share of CPRX have started to rebound and uptrend a bit, with shares making lower highs and setting up for higher highs. That move is quickly pushing CPRX within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in CPRX once it manages to break out above some near-term overhead resistance at $1.78 a share with high volume. Look for a sustained move or close above $1.78 a share with volume that hits near or above its three-month average action of 1.3 million shares. If that breakout triggers soon, then CPRX will setup to re-test or possibly take out its next major overhead resistance levels at $2.04 to $2.27 a share. Any high-volume move above $2.27 will put $2.60 to $3 into focus for CPRX.

One could look to buy CPRX off weakness to anticipate that breakout, and simply use a stop that sits right around some key near-term support at $1.54 a share. One could also buy off strength once CPRX clears $1.78 with high volume, and then simply use a stop right below its 50-day at $1.59 a share. I would add to either position once CPRX takes out $2.04 to $2.27 with strong upside volume.

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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