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5 Stocks Under $10 Set to Soar

Biostar Pharmaceuticals

In the biotech complex, another under-$10 stock that looks ready to enter breakout territory is Biostar Pharmaceuticals (BSPM), a holding company that develops, manufactures and markets pharmaceutical products for a variety of diseases and conditions in the People's Republic of China. This stock has been smacked down by the sellers so far in 2012, with shares off by over 25%.

If you take a look at the chart for Biostar Pharmaceuticals, you'll notice that for the last three months, this stock has been trending sideways between $1.53 on the upside and $1.10 on the downside. Shares of BSPM have just started to bounce strongly right off its 50-day at $1.25 a share with above-average volume. That move is quickly pushing BSPM within range of triggering a near-term breakout trade.

>>5 Hated Stocks Poised to Pop on Earnings

Traders should now look for long-biased trades in BSPM once it manages to break out above some near-term overhead resistance levels at $1.42 to $1.46 a share, and then above $1.53 to $1.55 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 23,882 shares. If that breakout triggers soon, then BSPM will set up to re-test or possibly take out its next major overhead resistance level at its 200-day moving average of $1.65. Any high-volume move above $1.65 will set up BSPM to tag $1.85 or possible north of its June high of $2 a share.

Traders can look to buy BSPM as long as it's trending above its 50-day moving average at $1.25 a share with strong upside volume flows. You can also buy off strength once BSPM takes out $1.42 to $1.55 with volume and then add to either position above $1.65 a share. I would stop out of either trade below the 50-day at $1.25 a share.
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