WINDERMERE, Fla. ( Stockpickr) -- Every day, certain stocks trading for $10 a share or less experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Real Goods Solar (RSOL), which skyrocketed 64.9%; CounterPath (CPAH), which ripped higher by 19.7%; Recon Technology (RCON), which soared by 17.9%; and Goldfield (GV), which jumped up 11%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
One low-priced stock that recently skyrocketed higher is medical equipment and supplies player Edap (EDAP - Get Report), which I highlighted in Jan. 3's " 5 Stocks Under $10 Making Big Moves" at around $2.34 a share. I mentioned in that piece that shares of EDAP were exploding higher right off some near-term support at $2.10 with monster upside volume. That move was quickly pushing shares of EDAP within range of triggering a major breakout trade once it took out some overhead resistance levels at $2.63 to $2.85 with high volume. I suggested that traders look for long-biased trades in EDAP as long as it was trending above $2 and then once it triggered that breakout with solid volume.Guess what happened? Shares of EDAP triggered that breakout a few trading sessions later and the stock hit a high of $3.05 a share. The stock then dipped back down to $2.40 but never violated its major support that sits right around $2 a share. That gave shares of EDAP another chance to set up for another big breakout, and the stock went on to take out $3.05 a share the following day with massive upside volume. Shares of EDAP have now hit a recent high of $3.65 a share, which represents a big gain for anyone who played that breakout trade. >>5 Stocks With Big Insider Buying Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames. 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 trade 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. With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels. >>4 Loser Stocks Poised for a Comeback in 2013