Another under-$10 name that's trending within range of triggering a near-term breakout trade is Atlantic Power (AT), a power generation and infrastructure company in the U.S. and Canada. This stock is has been hammered by the sellers so far in 2013, with shares off by 55%.
If you take a look at the chart for Atlantic Power, you'll notice that this stock recently gapped down big from over $10 to $6 a share on massive downside volume. Following that move, shares of AT continued to trend lower and the stock printed a new 52-week low of $4.56 a share. That move has pushed shares of AT into extremely oversold territory, since the stock has a relative strength index reading of 21.77. Shares of AT have started to bounce off that $4.56 low, and it's now quickly approaching a near-term breakout trade.
Traders should now look for long-biased trades in AT if it manages to break out above some near-term overhead resistance at $5.15 a share with high volume. Look for a sustained move or close above $5.15 a share with volume on that move that hits near or above its three-month average action of 1.54 million shares. If AT triggers that breakout soon, then this stock will set up to re-test or possibly take out its next major overhead resistance level at $5.76 to its gap down day high of $7.32 a share. Any high-volume move above $7.32 will then give AT a chance to re-fill some of its gap down zone that started near $10 a share.Traders can look to buy AT off any weakness to anticipate that breakout and simply use a stop that sits right below $4.56 a share. One can also buy AT off strength once it takes out $5.15 with volume and then simply use a stop that's a few percentage points blow your entry point.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV