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TheStreet Open House

5 Stocks Under $10 Set to Soar Higher

Stock quotes in this article: MY, VRNG, LEI, ZLCS, IQNT

Zalicus

Another under-$10 name that's trading close to triggering a near-term breakout trade is Zalicus (ZLCS), a biopharmaceutical company that discovers and develops novel treatments for patients suffering from pain and immuno-inflammatory diseases. This stock is off to a hot start in 2013, with shares up a whopping 16.5%.

If you take a look at the chart for Zalicus, you'll notice that this stock has been trending sideways for the last two months and change, with shares moving between 57 cents on the downside and 83 cents on the upside. Shares of ZLCS have just started to bounce off its 50-day moving average of 67 cents and its quickly moving within range of triggering a near-term breakout trade above the upper-end of its recent chart pattern.

Market players should now look for long-biased trades in ZLCS if it manages to break out above some near-term overhead resistance levels at 80 to 83 cents per share and then once it takes out some past overhead resistance levels at 91 cents to $1.10 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 1,141,380 shares. If that breakout triggers soon, then ZLCS will set up to re-fill some of its previous gap down zone above $1.10 a share. That gap started at around $1.40 a share, so any move above 91 cents to $1.10 will put that gap into play for shares of ZLCS.

Traders can look to buy ZLCS off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day moving average of 67 cents per share. One could also buy ZLCS off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below 80 cents per share. I would add to either position once ZLCS clears 91 cents to $1.10 a share with volume.

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