Midway Gold

One more under-$10 stock that is already starting to break out is Midway Gold ( MDW), an exploration-stage company engaged in the acquisition, exploration and development of gold and silver mineral properties in North America. This stock has been a big winner so far in 2011, with shares up over 244%.

What's even more interesting about this stock today is that it is trending higher by over 5.8% while gold is down over 40 points. This shows that the stock has some relative strength, but the miners haven't exactly followed the commodity price in the past, so take that for what it's worth.

If you take a look at the chart for Midway Gold, you'll see that this stock is bumping up against a major breakout level at $2.89 a share. In fact, the stock was trading over that level for a bit already today since shares hit a daily high at $2.97 a share. What's even more bullish is that MDW is already showing volume that's tracking in strong today. Volume has already registered 1.1 million shares which is well above its three-month average volume of 964,800 shares. If this breakout is the real deal and not a false move, then this stock could be setting up for a large spike higher.

You could buy this stock on any weakness or wait for a close above $2.89 with strong volume. That close might happen today, or it might not, so watch those key levels. If you buy this stock off weakness or off a strong close, then I would use a stop at around $2.82 a share since that was prior resistance. If this breakout materializes, then that price level will become support or won't be touched again. The stock could even trade down to $2.52 a share and still be in a strong uptrend in the near-term.

I think a 20% or more spike higher is in the cards here if we see a sustained breakout, so keep this name on your radar.

To see more hot under-$10 stocks, including VIVUS ( VVUS), Hawaiian Holdings ( HA) and Joe's Jeans ( JOEZ), check out the Under-$10 Stocks Setting Up to Trade Higher 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.

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