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5 Stocks Under $10 Set to Soar

Atlantic Power

Another under-$10 name that's trending within range of triggering a near-term breakout trade is Atlantic Power (AT - Get Report), 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.

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