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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Under $10 Set to Soar

Stocks in this article: BEE STP TSL MTG LDK DQ

Suntech Power

One under-$10 stock that looks poised to trigger a major breakout trade is Suntech Power ( STP), which is a solar energy company, which designs, develops, manufactures and markets a number of PV cells and modules. This stock has been hit hard by the bears so far in 2013, with shares down by 30%.

If you take a look at the chart for Suntech Power, you'll notice that this stock is just starting to flirt with some near-term overhead resistance at $1.07 a share. You'll also notice that shares of STP have formed a triple bottom over the last month, with the stock finding buying interest at 86 cents, 89 cents and 93 cents per share. That triple bottom zone is now a major base for STP to launch from with the stock starting to flirt with a major breakout trade.

>>4 Tech Stocks Under $10 to Watch

Traders should now look for long-biased trades in STP if it manages to break out above some near-term overhead resistance levels at $1.18 to $1.28 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 5.51 million shares. If that breakout triggers soon, then STP will set up to re-test or possibly take out its next major overhead resistance levels at $1.70 to $1.78 a share. Any high-volume move above those levels will then give STP a chance to tag its next major overhead resistance levels at $2 to $2.15 a share.

Traders can look to buy STP off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at 84 cents per share. One can also buy STP off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Keep in mind that buying above $1.07 is also prudent since that's a key breakout level right before $1.18 to $1.28 a share.

This stock has big short-squeeze potential, since the current short interest as a percentage of the float for STP is very high at 14.12%. This breakout could be exactly what's needed to force the bears to cover some of their short positions, so make sure to keep this name on your trading radar.

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