WINDERMERE, Fla. (Stockpickr) -- There isn't a day that goes by on Wall Street that certain stocks trading near or 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 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 today, including
, soaring 20%, and
, spiking around 16%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
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
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 mine, here 's a look at
ATP Oil & Gas
One under-$10 name that could be poised for some decent upside from here is oil and natural gas player
ATP Oil & Gas
( ATPG). This stock is off to a weak start in 2012 with shares off by around 7%.
If you take a look at the chart for ATP Oil & Gas, you'll notice that this stock has been downtrending hard from its recent high of $9.50 to a low of $6.41 a share. That downtrend just pushed this stock back below its 50-day moving average of $7.57 a share. That said, the stock is now trading near some previous support levels at around $6 to $6.23 a share. In fact, yesterday the stock hit $6.41 and bounced a bit, which is bullish since it held above $6. Buyers have consistently support this stock since the start of the year whenever it's pulled back below $7 a share. If that pattern holds up here, then ATPG could be a solid buying opportunity.
Market players should now look for long-biased trades in ATPG if this stock can manage to hold above those previous support levels at $6 to $6.23 a share. If those levels hold, then I would look for confirmation of a near-term bottom once some overhead resistance at $7 a share is taken out with high-volume. Look for volume on a move above $7 that's near or well above its three-month average action of 2.2 million shares. If we get that action, then look for ATPG to bounce past its 50-day with volume and challenge $8 to $9 a share. Those levels are very achievable since each time in the past few months it's traded below $7 it's bounced to $8 or higher once buyers stepped back into this stock.
As long as ATPG is trending above $6 with strong upside volume flows, then this stock could be marking a near-term bottom. Any high-volume move below $6 would quickly change that dynamic and make this stock vulnerable for more downside in the near-term.
Another under-$10 stock that could be a buying opportunity at current levels is biotechnology company
. This stock is one of the top stocks in 2012, with shares up over 390%.
If you take a look at the chart for Threshold Pharmaceuticals, you'll notice that this stock made a monster move during the last two months, from $1.27 a share to its recent high of $9.07 a share. During that run-up, the stock has gapped up a number of times with huge volume, and it's triggered a bunch of breakouts with volume. That said, the stock has finally seen the sellers take the upper hand since it's just pulled back from $9.07 to around $6 a share. If this stock can now hold above its 50-day moving average, then it could be setting up for a solid buying opportunity if the bulls return.
Market players should now look for long-biased trades in THLD if this stock can stop its near-term downtrend and find some buying interest as it approaches its 50-day moving average of $5.72 a share. If that level gets hit, and it doesn't get violated with heavy volume, then we could catch a sizeable bounce in the near-term. That bounce would also be confirmed if THLD holds the 50-day and then breaks out above some near-term overhead resistance at $7.08 a share. Look for volume on a move over $7.08 that's near or well above its three-month average volume of 3.7 million shares.
I would avoid any long trades in THLD if it loses that 50-day with heavy volume, but I would continue to look for long trades as long as the 50-day holds and it's trending above it with strong upside volume flows. Keep in mind that during the past few months and change THLD has yet to violate its 50-day, so look for that trend to continue of $5.72 holds up.
Advanced Micro Devices
Another under-$10 name that could be gearing up for some decent upside is
Advanced Micro Devices
, a global semiconductor company with facilities globally. This stock is out the gate strong in 2012, with shares up over 40% so far.
If you take a look at the chart for Advanced Micro Devices, you'll notice that this stock has been uptrending strong since the start of the year, with shares soaring from around $5 to a recent high of $8.35 a share. During that run-up, this stock has consistently made higher lows and higher highs which is bullish technical price action. That said, this stock just ran into selling pressure at $8.33 to $8.35 a share, and has pulled back to its 50-day moving average of $7.59 a share. If that 50-day and recent low of $7.52 can hold up here, then AMD could be a good buy entry.
Traders should now look for long-biased trades in AMD if it can manage to continue its trend above $7.52 a share with strong upside volume flows. If that level does hold up for AMD, then this stock should re-test its recent highs of $8.33 to $8.35 pretty quickly. If we get that move to the highs, then watch for a high-volume breakout to trigger over $8.35.
Look for volume on that move that's near or well above its three-month average action of 16.4 million shares. Target a run up towards $9.17 to $9.60 if that breakout triggers with volume soon.
AMD shows up on a recent list of
One under-$10 name in the supplies and fixtures complex that looks compelling here is
, a manufacturer and distributor of building products and materials to the recreational vehicle and manufactured housing industries. This stock is off to a hot start in 2012, with shares up over 110%.
If you take a look at the chart for Patrick Industries, you'll notice that this stock has been uptrending ridiculously strong for the past six months, with shares advancing from a low of $1.54 to a recent high of $13.20 a share. During that uptrend, the stock has consistently made higher lows and higher highs, which is bullish technical price action. Also, the stock has yet to violate its 50-day moving average during that monster move higher. Shares of Patrick Industries just recently pulled back from $13.20 to its 50-day moving average at $8.14 a share. If the 50-day holds again here, then PATK could be setting up to continue its trend higher.
Market players should look for long-biased trades in PATK as long as this stock is trending above its 50-day moving average with strong upside volume flows. On Thursday, this stock hit a high of $9.33 a share, and its recent low is $8 a share. As long as $8.14 to $8 a share holds up, then the next major breakout over $9.33 could signal that PATK wants to make another solid run higher.
Look for volume on a move over $9.33 a share that's near or well above its three-month average action of 97,352 shares. If we get that action soon, look for PATK to make a run at its recent high of $13.20 a share. I would consider any weakness in this stock as a buying opportunity as long as it doesn't violate its 50-day moving average with heavy volume.
One under-$10 stock in the printing and publishing complex that looks poised for decent upside is
, which provides local news, information, and advertising services primarily in midsize and small markets in the U.S. This stock is off to a very strong start in 2012 with shares up over 65% so far.
If you take a look at the chart for Lee Enterprises, you'll notice that for the last few months, this stock has been finding consistent buying interest whenever it's pulled back to just above $1 a share. This demonstrates that large traders are no longer willing to sell the stock at this time when it hits that price level. Now shares of Lee Enterprises have started to move back above its 50-day moving average of $1.15 a share. This move could be the start of a much larger trend higher for this stock.
Traders should now look for long-biased trades in LEE as long as this stock is trending above its 50-day moving average with strong upside volume flows. If that level holds, and if it's most recent lows of $1.04 to $1.07 hold, then this stock could be setting up for a significant run higher. The next major overhead resistance on LEE sits at $1.35 a share. If that price point gets hit and then taken out with volume we could easily see a run-up towards $1.73 a share or higher in the near-term. Look for volume on any move over $1.35 that's near or well above its three-month average volume of 529,394 shares.
I would simply use a mental stop just below $1.04 to $1.07 a share, or simply stop out on any large volume move below its 50-day moving average. This stock is coiled with all that buying support just above $1, so look for any strength from here to play this stock from the long side.
To see more hot under-$10 stocks, check out the
portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
Follow Stockpickr on
and become a fan on
At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.