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.
>>Outwit the S&P in 2013 With 5 Hated Stocks
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
(ACAD - Get Report)
, which is focused on the development and commercialization of small molecule drugs for the treatment of central nervous system disorders. This stock has been on fire during the last three months, with shares soaring over 70%.
If you take a look at the chart for Acadia Pharmaceuticals, you'll see that this stock gapped up sharply back in December from just under $2.50 a share to a high of $6.53 a share with monster upside volume. Following that move, shares of ACAD have sold off to its recent low of $4.17 a share. The stock has now started to trend sideways with shares moving between $4.62 on the downside and $5.18 on the upside. A high-volume move above the upper-end of that recent range will trigger a breakout for shares of ACAD.
Traders should now look for long-biased trades in ACAD if it manages to break out above some near-term overhead resistance levels at $5.00 to $5.18 a share and then once it clears more resistance at $5.50 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 3,339,370 shares. If that breakout hits soon, then ACAD will set up to re-test or possibly take out its recent high of $6.53 a share.