4 Stocks Under $10 Setting Up to Break Out

There isn't a day that goes by on Wall Street when certain stocks trading for under $10 a share don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sod risk management are banking ridiculous coin on a regular basis.

Low-priced stocks are something that I tweet about on a regular basis. These are also the exact type of stocks that I love to trade and alert in real time. 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.

When I trade under-$10 stocks, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 stocks 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.

Opko Health

If you take a look at the chart for Opko Health (OPK) , you'll notice that this stock is starting to trend back above its 20-day moving average of $8.17 a share. This trend back above its 20-day is on top of a recent uptrend, that has taken the stock from its new 52-week low of $7.13 to its recent high of $8.54. That uptrend is now starting to push shares of Opko Health within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Opko Health if it manages to break out above its 50-day moving average of $8.50 to $8.54 and then above more resistance at $8.92 with strong volume. Look for a sustained move above those levels with volume that hits near or above its three-month average of 5.15 million shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next resistance levels at $9.45 to its 200-day at $9.66 a share.

Rent-A-Center

If you take a look at the chart for Rent-A-Center (RCII) , you'll notice that this stock has been uptrending over the last two months, with shares moving higher off its low of $7.76 to its recent high of $9.62. During that uptrend, shares of Rent-A-Center have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a big breakout trade.

Traders should now look for long-biased trade in Rent-A-Center if it manages to break out above some near-term resistance at $9.62 to $10 with high volume. Look for a sustained trend above those levels with volume that hits near or above its three-month average of 2.05 million shares. If that breakout develops soon, then this stock will set up to make a run at $10.50 to its 200-day moving average of $11.10, or even $12 a share.

Constellium

If you take a look at the chart for Constellium (CSTM) , you'll notice that this stock has started to bounce modestly higher right above some near-term support at $5.50 with a number of strong upside volume sessions. That bounce is quickly pushing this stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Constellium if it manages to break out above its 200-day moving average of $6.22 and then above resistance at $6.50 with high volume. Look for a sustained move above those levels with volume that hits near or above its three-month average of 963,014 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $7.25 to its 50-day moving average of $7.36, or even its 20-day moving average of $7.54 a share.

Southwestern Energy

If you take a look at the chart for Southwestern Energy (SWN) , you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $7.20 to $7.22 over the last few weeks. Following that potential bottom, this stock has now started to spike higher and move within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Southwestern Energy if it manages to break out above its 20-day moving average of $7.84 and then above more key resistance levels at $7.88 to $8.05 and over $8.20 with volume that register near or above its three-month average of 14.85 million shares. If that breakout hits soon, then this stock will set up to make a run at its 50-day moving average of $8.83 to $9.15, or even $9.75 to $10 a share.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.