One under-$10 stock that's trending very close to triggering a major breakout trade is Active Network (ACTV), which is provide applications that form an online network connecting a fragmented and diverse group of activity and event organizers with a large base of potential participants. This stock has been destroyed by the sellers so far in 2012, with shares off by 62%.
If you take a look at the chart for Active Network, you'll see that this stock gapped down in early November from over $9 to a low of $5.02 a share with massive downside volume. Following that move, shares of ACTV went on to hit a new 52-week low of $4.60 a share. The stock then proceeded to form a double bottom at $4.60 to $4.64 a share, and it has now started to rebound and move within range of triggering a major breakout trade. That breakout will hit once ACTV clears some near-term overhead resistance levels and its gap down day high of $6.39 a share.
Traders should now look for long-biased trades in ACTV once it manages to break out above some near-term overhead resistance levels at $5.32 to $5.66 a share and then once it takes out more overhead resistance levels at $5.87 to $6.39 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 1,155,670 shares. If that breakout hits soon, then ACTV will set up to re-fill some of its previous gap down zone that started above $9 a share. Some possible upside targets are its 50-day at $7.29 to $9 a share. Traders can look to buy ACTV off weakness as long as it holds its double bottom levels at $4.64 to $4.60 a share. I would use a stop just below those levels. You can also buy off strength once ACTV clears those breakout levels with volume and then simply use a stop at around $5 a share.
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