WINDERMERE, Fla. (Stockpickr) -- There isn't a day that goes by on Wall Street when some 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 today in the under-$10 arena, including
, spiking big over 16%;
, ripping higher by over 15%;
, jumping over 10%; and
First California Financial
, also up over 10%. 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 mind, here's a look at a number of
Suntech Power Holdings
One under-$10 stock that's trading very close to some key breakout levels is solar energy player
Suntech Power Holdings
. This stock is off to a monster start in 2012, with shares up around 40%.
If you take a look at the chart for Suntech Power, you'll notice that this stock has been crushed from its August high of $7.77 to its recent low of $1.70 a share. After hitting that low in October, this stock has started to trend higher and make higher lows, which is bullish price action. Now STP is approaching a major breakout level that's worth watching for higher prices.
Market players should put STP on their
radar if this stock can sustain a
and close above $3.31 to $3.44 a share. Look for volume on that's near or well above its three-month average action of 3.41 million shares, if those levels get taken out soon. If we get that action, then this stock could easily trend back towards its 200-day moving average of $5.35 a share.
If you're bullish STP, you could just wait for the breakout to trigger and buy the stock off strength. I would simply use a mental stop that's a few percentage points below $3.31 a share. You could also buy off weakness and simply use a mental stop that's right below $2.90 a share and anticipate the breakout.
It's worth pointing out that this stock has a high short interest since 9.4% of the tradable float currently sold short by the bears. If we see a high-volume move over $3.31 to $3.44 a share soon, then a
could easily kick off since it looks like the bears are defending those resistance levels.
Another under-$10 name that's close to triggering a big breakout is
, which provides digital optical networking systems to telecommunications carriers worldwide. This is another stock off to a hot start in 2012, with shares ripping higher by over 14%.
If you take a look at the chart for Infinera, you'll notice that this stock has trended lower from its September high of $8.97 to a recent low of $6.07 a share. After printing that low, the stock has rebounded smartly to its current price of around $7.15 a share. That rebound has taken INFN back above its 50-day
of $6.73 and very close to its 200-day moving average of $7.16 a share. Now this stock is starting to flirt with some
Market players should keep an eye on INFN for a sustained high-volume move and close above $7.16 (its 200-day) and $7.19 a share. Look for volume that's tracking in close to or above its three-month average action of 1,009,360 shares. At last check, volume has hit 370,000 shares today, which is light, but the stock has touched $7.26. Keep in mind that the volume during the last four trading sessions (all up days) has been very strong.
One could get long INFN if the volume improves into the close and if the stock can at least close above $7.19 a share, or near its daily highs. If we get that action either today or soon, then watch for INFN to make a run at $7.75 a share, or potentially much higher. I would simply use a mental stop that's a few percentage points below its 200-day moving average of $7.16 if you get long. I would then add to any long positions if $7.75 gets taken out with high volume.
This is one another stock with a high short interest since around 11% of the tradable float is currently sold short by the bears. Keep this name on your short-squeeze radar if the breakout gets triggered in the near future.
One name under-$10 stock in the biotechnology and drugs complex that's starting to look very bullish is
, which is focused on the discovery, development and commercialization of orally administered, small molecule drugs known as pharmacological chaperones for the treatment of rare diseases. This stock has been blazing a trail in 2012, with shares up over 38% so far.
If you take a look at the chart for Amicus Therapeutics, you'll notice that this stock has been soaring since it hit a bottom at $2.10 in late November of last year. This stock has soared so much that its current price is quickly approaching $5 a share. This big run up in the stock is now pushing shares of FOLD up against some key breakout levels, that if hit, could lead to much higher prices.
Market players should now watch FOLD for a sustained
and close above $4.71 and $5.10 (200-day) a share to trigger a breakout trade. Look for volume that registers near or above its three-month average action of 58,210 shares. At last check, volume for FOLD has already hit 89,000 shares today with the stock trading at around $4.96 a share. This now puts FOLD within range of taking out $5.10, which would be very bullish price action.
You could be a buyer of FOLD off any weakness and simply use a mental stop that's just below $4.71 or that's near today's low of $4.34. You could also buy off strength if it takes out $5.10 soon, and simply use a mental stop right below that level. I would target a run back towards $6 to $7 a share, or possibly higher if we get a high-volume breakout over $5.10 for FOLD in the near future.
One name in the metal mining complex that's very close to challenging some major breakout levels is
, a natural resource exploration company engaged in the exploration of properties in the U.S. This stock is off to a solid start in 2012, with shares up over 12% so far.
If you take a look at the chart for Uranium Energy, you'll notice that this stock has been uptrending strong since hit a bottom in October of $2.20 a share. During that uptrend, the stock has been consistently making higher lows and now higher highs. This is very bullish price action and it demonstrates that traders are paying up to own shares because the stock is in high demand. Now UEC is approaching some big breakout levels that if taken out, could lead to big spike higher.
Market players should watch UEC for a big
if the stock can manage to sustain a high-volume move and close above $3.53 and $3.86 a share. Look for volume that's near or above its three-month average action of 420,748 shares. At last check, volume has registered over 506,000 shares today with the stock up 5% to 3.42. This is bullish price action since UEC took out some near-term overhead
today at $3.34 to $3.41 a share and the volume is strong.
You could be a buyer of UEC off any weakness as long as the stock continues to trend above $3.34 a share or at least its 200-day
of $3.20. I would use a mental stop below either of those levels depending on how much risk and room you want to give this stock. I would add to any long positions once UEC takes out $3.53 and then $3.86 with high-volume. If we get that action, target a run back towards $4.50 a share, or possibly much higher.
Keep in mind that this stock is heavily shorted with over 15% of its tradable float sold short by the bears. This big short interest could easily ignite a big short-squeeze if UEC triggers a breakout above those levels I mentioned above.
Ascent Solar Technologies
One more under-$10 stock that could be setting up here for an explosive move higher is
Ascent Solar Technologies
, a development stage company formed to commercialize flexible photovoltaic modules using a technology. This stock is off to a booming start in 2012, with shares up over 50% coming into today.
If you take a look at the chart for Ascent Solar Technologies, you'll see that this stock has been on a rampage from when it hit a recent low of $0.36 a few weeks ago. After hitting that low, the stock has uptrended strong to its current price of around $0.65 a share. Now shares of ASTI are setting up to trigger an even bigger breakout if the stock can manage to take out some near-term overhead resistance levels.
Traders should now look for ASTI to take out some near-term overhead resistance at $0.60 and then its 50-day moving average of $0.64 with high-volume. At last check, volume today is already huge with over 655,000 shares traded versus its three-month average action of just 125,195 shares. The stock has also touched $0.68 today, so look for ASTI to clear near its daily highs to signal it wants to trend much higher.
You could be a buyer of ASTI off any weakness and simply use a mental stop that's a few percentage points below the recent breakout level of $0.60. I would target a run back towards $0.82 to $0.90 a share if ASTI can continue to trend above its 50-day with strong volume. It's even possible its 200-day moving average of $1.01 could be hit in the near future, if the price and volume action remain bullish.
To see more hot under-$10 stocks, check out the
portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
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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.