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 Bonso Electronics (BNSO), which is skyrocketing higher by 48%; XG Technology (XGTI), which is soaring higher by 19%; Allied Healthcare Products (AHPI), which is ripping higher by 16%; and Dynasil Corporation of America (DYSL), which is spiking higher by 10%. 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 spiked sharply higher after I featured it was biopharmaceutical player Alimera Sciences (ALIM), which I highlighted in Jan. 10's "5 Stocks Poised for Breakouts" at around $4.80 per share. I mentioned in that piece that shares of Alimera Sciences had recently entered into a consolidation chart pattern and the stock was starting to spike higher off its recent lows. That spike was quickly pushing shares of ALIM within range of triggering a big breakout trade above some key near-term overhead resistance levels at $4.83 to $5.14 a share.
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Guess what happened? Shares of Alimera Sciences didn't wait long to trigger that breakout, since the stock exploded higher the following trading session with strong upside volume. This stock then went on to uptrend for the next four trading sessions with bullish upside volume flows. Shares of ALIM tagged an intraday high on January 17 at $8.44 a share, which represents a monster gain of over 70% in just six trading sessions for anyone who bought this stock in anticipation of the breakout. You can see here how under-$10 stocks can make powerful moves in very short timeframes when key resistance levels get taken out with 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.
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.