8x8

One more under-$10 stock that's trading within range of triggering a major breakout trade is 8x8 ( EGHT), which offers voice, video, mobile and unified communications solutions for business of all sizes. This stock has been on fire so far in 2012, with shares up by over 110%.

If you take a look at the chart for 8x8, you'll notice that this stock has been uptrending very strong for the last six months, with shares soaring from a low of $3.80 to its recent high of $7.02 a share. During that uptrend, shares of EGHT have been making higher lows and high highs, which is bullish technical price action. The stock recently pulled back off $7.02 to a low of $5.62 a share, but it's started to rebound back above its 50-day and move within range of triggering a major breakout trade.

Traders should now look for long-biased trades in EGHT once it manages to break out above some near-term overhead resistance at $6.55 to $7.02 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 850,540 shares. If that breakout triggers soon, then EGHT will have a great chance of hitting $8 to $10 a share or possible even higher.

One could look to buy EGHT off weakness to anticipate that breakout, and simply use a stop that sits right around its 50-day at $6.21 a share. One could also buy off strength once EGHT clears $6.55 to $7.02 a share with high volume and then simply use the same stop at around $6.21 a share.

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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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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