DELAFIELD, Wis. ( Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less don't 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 Thursday, including Ku6 Media ( KUTV), which is rocking higher by 29%; FreeSeas ( FREE), which is soaring higher by 20%; Vonage ( VG), which is ripping to the upside by 17%; and EnteroMedics ( ETRM), which is spiking up 13%. 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 skyrocketed higher is agricultural biotechnology player Ceres ( CERE), which I highlighted in Sept. 27's " 5 Stocks Poised for Breakouts" at $1.47 per share. I mentioned in that piece that shares of CERE were just starting to trend back above its 50-day moving average at $1.45 a share with heavy upside volume. That spike was quickly pushing shares of CERE within range of triggering a big breakout trade above some near-term overhead resistance levels at $1.67 to $1.68 a share.>>5 Stocks Hedge Funds Love This Fall Guess what happened? Shares of CERE started to trigger that breakout on October 2 after the stock hit an intraday high of $1.80 a share. The stock pulled back off that $1.80 level and traded right to its 50-day moving average of $1.39 a share and held at that key support zone. Then yesterday, shares of CERE exploded to the upside with monster upside volume as the stock hit an intraday high of $1.84 a share. That move represents a gain of over 30% for anyone who bought the stock under $1.50 a share. Shares of CERE have now hit an intraday high today of $2.09 a share, which adds even more gains to anyone who played this favorable technical setup. Shares of CERE still look poised for more upside, so traders should now watch for this stock to take out Thursday's high of $2.09 a share with strong volume. 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. >>5 Stocks Rising on Unusual Volume 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.
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