WINDERMERE, Fla. ( Stockpickr) -- Every day, the market sees 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 Zogenix (ZGNX), which soared by 40%; First Security Group (FSGI), which ripped higher by 27.9%; Old Second Bancorp (OSBC), which jumped 24.5%; and Meru Networks (MERU), which advanced by 19.7%. 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 exploded higher was nanomedicine player Arrowhead Research (ARWR), which I highlighted in Feb. 20's " 4 Biotech Stocks Under $10 Moving Higher" at around $2.04 a share. I mentioned in that piece that shares of ARWR were starting to rebound off its recent low of $1.75 and were quickly moving within range of triggering major breakout trade above some near-term overhead resistance levels at $2.18 to $2.24 a share.Guess what happened? Shares of ARWR never looked back after I wrote that piece and the stock managed to close above its 50-day moving average on Feb. 25. The following day, shares of ARWR triggered that breakout I was waiting for with heavy upside volume. The stock hit an intraday high of $2.70 a share, which represents a massive gain for anyone who bought the stock in anticipation of the move. This was a beautiful technical setup for ARWR, since the stock was uptrending strong prior to its breakout and we had huge upside volume of 1.4 million shares once it triggered. >>5 Huge Stocks You Need to Sell 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. >>5 Stocks With Major Insider Buying