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5 Stocks Under $10 Set to Soar

Mela Sciences

One more under-$10 stock that's quickly moving within range of triggering a major breakout trade is Mela Sciences (MELA), a medical device company engaged in designing and development of a non-invasive, point-of-care instrument to assist in the early diagnosis of melanoma. This stock has been hit hard by the sellers so far in 2013, with shares off by 30%.

If you take a look at the chart for MELA Sciences, you'll notice that this stock has been trending inside of a consolidation pattern for the last two months, with shares moving between $1.08 on the downside and $1.27 on the upside. Shares of MELA recently started to bounce off $1.10 a share and it's now quickly moving within range of triggering a major breakout trade above the upper end of its recent range.

Traders should now look for long-biased trades in MELA if it manages to break out above some near-term overhead resistance levels at $1.25 to its 50-day moving average at $1.27 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 478,303 shares. If that breakout triggers soon, then MELA will set up to re-test or possibly take out its next major overhead resistance levels at $1.60 to $1.75 a share. Any high-volume move above those levels will then put $1.83 to $2, or even $2.20 into range for shares of MELA.

Traders can look to buy MELA off weakness to anticipate that breakout and simply use a stop just below some key near-term support levels at 1.10 to $1.08 a share. One can also buy off strength once MELA clears those breakout levels with volume and then simply use a stop just below $1.15 a share.

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 Madison, Wis.

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Stock quotes in this article: SCMP, ATRS, SNFCA, ENPH, RBCN, MELA 

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

Roberto Pedone, based out of Madison, Wis., 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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