5 Stocks Under $10 Ready to Soar Higher

Solazyme

One more under-$10 stock that's trending very close to triggering a near-term breakout trade is Solazyme (SZYM), which is in the business of transforming a range of low-cost plant-based sugars into high-value oils. This stock has been thrashed by the bears during the last six months, with shares off by 39%.

If you take a look at the chart for SZYM, you'll notice that this stock has just started to trend back above its 50-day moving average of $7.73 a share with solid upside volume. Volume today has already registered 630,000 shares which is just a bit below its three-month average action of 640,387 shares. This move is quickly pushing shares of SZYM within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in SZYM if it manages to break out above some near-term overhead resistance levels at $8.60 to $8.79 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 640,387 shares. If that breakout triggers soon, then SZYM will set up to re-test or possibly take out its next major overhead resistance levels at $9.90 to its 200-day moving average at $10.31 a share. Any high-volume move above its 200-day will then put $11 to $12 into range for shares of SZYM.

Traders can look to buy SZYM off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at its 50-day of $7.83 or at $7.50 a share. One could also buy SZYM off strength once it clears those breakout levels with volume and then simply use a stop that sits just below $8.30 a share.

This is another favorite target of the short-sellers, since the current short interest as a percentage of the float for SZYM is very high at 19.2%. If that breakout triggers soon, then SZYM has some serious short-squeeze potential, so be ready to play this if it hits.

To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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