I scanned my watch lists over the weekend to find out which stocks and sectors had escaped the brunt of Friday's nasty decline.
Not surprisingly, the majority of single-digit stocks had survived with flying colors.
Low-priced equities had a great a run in 2003, after the bear market transformed hundreds of highfliers into members of the cheap-stock club.
But that rally ended a year later, and most of this group fell back toward historic lows.
Unfortunately, many failed to meet exchange requirements and eventually dropped off the national boards.
Single-digit stocks finally are attracting fresh capital, with many of these small wonders showing excellent reward-to-risk profiles.
Undoubtedly, the first quarter's choppy market forced many retail traders to step away from the mainstream to find well-organized chart patterns.
Low-priced stocks fill the bill as we head toward the middle of 2006.
I've pulled up six single-digit stocks that look ready to move higher in the weeks ahead.
As you go through the list, please note my comments about the best time to consider purchasing one of these volatile issues.
Bad trade entries on low-priced stocks will cost you a lot of money.
Art Technology Group
sold off from $126 to 58 cents during the bear market. It bottomed out in late 2001 and moved into a long sideways pattern, with resistance at $5.15. The stock is now moving higher on solid volume and could approach that key level soon. The potential gain between the current price and the top of the sideways pattern offers excellent upside potential.
is an industrial metals developer benefiting from the worldwide commodity boom. The stock is currently trading at its all-time high in a triangle pattern that began three weeks ago. Once price mounts resistance at $9.80, the stock should exit the single-digit club and push well above $11 before testing new support.
dropped from $91 to 20 cents during its post-bubble plunge. It just broke out to a five-year high on heavy volume. Unfortunately, the stock is overextended here and could pull back to test support near $5 at any time. But it shows little overhead resistance from current levels until it reaches the August 2000 recovery high over $13. That would be a double from Tuesday's close.
topped out at $431 in 2000 and dropped to $1.19 in the next three years. It's been moving higher since July 2005 and now is pulling back from intermediate resistance at $8. It looks like the stock eventually will mount this level and make a final push into stronger resistance at $11.44. That translates into a 40% rally, if it happens.
Junior gold companies are top single-digit performers right now.
Tanzanian Royalty Exploration
develops gold resources in East Africa. It rallied to an all-time high at $7.45 in January and has been moving sideways in a triangle for the last three months. An entry at support below $6, with a tight stop loss, could yield a fast move to $10.
Northern Orion Resources
, a current pick in
The Daily Swing Trade, has risen 150% in the last four months. It just sold off at "round number" $5 and could drop back to support at $4.10 before it stabilizes. But the stock should eventually recover and continue its powerful rally through the summertime.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Art Technology Group, GigaMedia and Sirna Therapeutics to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Farley was long Art Technology Group and Gerdau Ameristeel, although holdings can change at any time.
Alan Farley is a professional trader and author of
The Master Swing Trader
. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback;
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