Another under-$10 technology player that's quickly trending within range of triggering a near-term breakout trade is American Superconductor (AMSC - Get Report), which provides megawatt-scale solutions that lower the cost of wind power and enhance the performance of the power grid. This stock has been hit hard by the bears over the last six months, with shares down sharply by 34%.
If you take a look at the chart for American Superconductor, you'll notice that this stock recently formed a double bottom chart pattern at $1.37 to $1.43 a share. Following that bottom, shares of AMSC have started to rip higher and move back above its 50-day moving average of $1.56 a share. That sharp spike higher is now quickly pushing shares of AMSC within range of triggering a near-term breakout trade.
Market players should now look for long-biased trades in AMSC if it manages to break out above some near-term overhead resistance levels $1.72 to $1.83 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 844,058 shares. If that breakout hits soon, then AMSC will set up to re-test or possibly take out its next major overhead resistance levels at $2.04 to $2.13 a share, or even its 200-day at $2.18 to $2.30 a share.
Traders can look to buy AMSC off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day moving average of $1.56 a share or below more support at $1.50 a share. One can also buy AMSC off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.