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 from Wednesday, including Ocean Power Technologies (OPTT), which skyrocketed by 70%; Complete Genomics (GNOM), which ripped to the upside by 42%; Amyris (AMRS), which traded up 18%; and SkyWest (SKYW), which closed up 14%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading. >>5 Big Stocks Ready to Slingshot Higher I highlighted Ocean Power Technologies in " 7 Stocks Under $10 With Relative Strength" for its bullish price action when it was trading at just $2.20 a share. I also recently flagged SkyWest in another 5 stocks under $10 set to soar article, well before it made that monster move higher on Wednesday. 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 trade 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. >>ACTIVE STOCK TRADERS: Check out Stockpickr's special offer for Real Money, headlined by Jim Cramer, now! 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 several under-$10 stocks that look poised to potentially trade higher from current levels.
Lexicon PharmaceuticalsOne more under-$10 name that looks ready to trigger a big-time breakout trade is Lexicon Pharmaceuticals ( LXRX - Get Report). This is a biopharmaceutical company focused on the discovery and development of breakthrough treatments for human disease. This stock is off to a monster start in 2012, with shares up over 110%. If you take a look at the chart for Lexicon Pharmaceuticals, you'll see that this stock has been uptrending extremely strong since it broke out in June above some past overhead resistance at $2.01 a share. Since triggering that breakout, shares of Lexicon Pharmaceuticals have skyrocketed to a recent high of $2.90 a share. During that uptrend, shares of LXRX have been making higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a near-term breakout trade. Traders should now look for long-biased trades in LXRX if it can manage to trigger a near-term breakout trade above some overhead resistance levels at $2.78 to $2.90 with high volume. Look for a sustained move or close above those levels with volume that's near or above its three-month average action of 1,093,060 shares. If we get that action soon, then LXRX could explode north of $3 a share and possibly tag $4 a share rather rapidly. One could be a buyer of LXRX off weakness to anticipate that breakout, and simply use a stop just below some near-term support at $2.54 to $2.30 a share. If you buy off weakness, then I would add to the position once $2.78 to $2.90 is taken out with volume. You could just also buy off strength and get long once this breaks out over $2.78 to $2.90 a share, and simply use a stop at around $2.54 or a big higher. To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up To Explode portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
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