WINDERMERE, Fla. (Stockpickr) -- There isn't a day that goes by on Wall Street when stocks trading for $10 a share or less don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
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Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Green Plains Renewable Energy (GPRE), which soared by 28%; Hansen Medical (HNSN), which ripped higher by 25.4%; Recon Technology (RCON), which trended up by 23.5%; and Sanmina-SCI (SANM), which spiked higher by 16.8%. You don't even have to catch the entire move in lower-priced stocks to make outsized returns when trading.
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One low-priced stock that recently ripped to the upside was Asia Entertainment & Resources (AERL)
, which I highlighted in Oct. 12's "5 Stocks Poised for Breakouts
" at around $3.17 a share. I mentioned that AERL had rebounded off its previous low of $2.83 a share and it was starting to approach its 50-day moving average at $3.37 a share. That rebound was moving AERL within range of triggering a near-term breakout trade above some overhead resistance at $3.13 to $3.37 a share.
Guess what happened? In just a few weeks, shares of AERL started to trend above $3.13 and back above its 50-day at $3.37 a share. On Wednesday, this stock exploded higher with monster volume right near its 50-day, and it's currently trading at around $4.29 a share. The recent strength in AERL has started to push the stock within range of triggering another major breakout trade above some overhead resistance levels at $3.80 to $4.66 a share. If those levels get taken out with volume, then AERL could be heading toward $5.50 to $6 a share in the near future.
Low-priced stocks are something that I tweet about on a regular basis.
I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.
I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I love to trade
stocks that are priced below $10. I view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.
When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.
With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.