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 definitely love to
stocks that are priced below $10. I like to 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.
One under-$10 stock that's trending very close to triggering a near-term breakout trade is
(ACW - Get Report)
, which is a manufacturers & suppliers of commercial vehicle components in North America. This stock has been hammered by the bears so far in 2012, with shares off by a whopping 60%.
If you take a look at the chart for ACW, you'll notice that this stock had been downtrending badly from August to mid-November, with shares falling from a high of $6.24 to its recent low of $2.21 a share. During that downtrend, shares of ACW were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ACW have now started to uptrend since hitting $2.21 a share and it's quickly moving within range of triggering a near-term breakout trade. Traders should now look for long-biased trades in ACW once it manages to break out above some near-term overhead resistance levels at $2.75 to $3.08 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 520,908 shares. If that breakout triggers soon, then ACW will set up to re-test or possibly take out its next significant overhead resistance levels at $3.27 to $4.50 a share.
Traders can look to buy ACW off weakness as long as it's trending above some near-term support at $2.40 a share and then simply use a stop just below that level. One could also buy off strength once ACW takes out $2.75 to $3.27 with volume and then use a stop that sits right below $2.60 a share.