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5 Stocks Under $10 Set to Soar

ServiceSource International

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One under-$10 stock that's trending very close to triggering a major breakout trade here is ServiceSource International (SREV), which helps hardware, software, health care and life sciences companies derive from their customers more revenue from maintenance, support and subscription agreements. This stock has been hammered by the bears during the last six months, with shares down by 55%.

If you take a look at the chart for ServiceSource International, you'll notice that this stock has been uptrending strongly for the last month and change, with shares soaring from a low of $4.01 to its recent high of $6.10 a share. During that uptrend, shares of SREV have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed SREV within range of triggering a major breakout trade.

>>5 Tech Sector Bargains to Buy in 2013

Traders should now look for long-biased trades in SREV if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of $5.96 a share and then once it clears some more overhead resistance at $6.10 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 1.1 million shares. If that breakout triggers soon, then SREV will set up to re-fill some of its gap down zone from early November that started near $9 a share. Some possible upside targets if SREV gets into that gap with volume are $8 to $9 a share.

Traders can look to buy SREV off any weakness as long as it's trending above some near-term support at $5.66 a share. I would use a stop that sits just below that level. You can also buy off strength once SREV clears those breakout levels with volume and then simply use the same stop that sits right below $5.66 a share.
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