Golden Minerals

Another under-$10 name that's starting to move within range of triggering a near-term breakout trade is Golden Minerals ( AUMN), a precious metals producer primarily engaged in the operation and further development of Velardea gold, silver and base metals mines in the State of Durango, Mexico, and silver exploration property in Salta, Argentina. This stock has been hit hard by the sellers so far in 2013, with shares off by 25%.

If you take a look at the chart for Golden Minerals, you'll see that this stock has been downtrending for the last month, with shares falling from its recent high of $4.87 to its low of $3.18 a share. During that downtrend, shares of AUMN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AUMN have started to stabilize and consolidate between $3.18 and $3.45 a share. That sideways price action now has AUMN quickly moving within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in AUMN if it manages to break out above some near-term overhead resistance levels at $3.45 to $3.57 a share and then once it takes out more resistance at $3.68 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 347,260 shares. If that breakout triggers soon, then AUMN will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day of $4.18 a share or its 200-day at $4.58 a share. Any high-volume move above $4.58 will then put $4.87 to $4.97 into range for shares of AUMN.

Traders can look to buy AUMN off any weakness to anticipate that breakout and simply use a stop that sits right around its near-term support at $3.18 a share. One could also buy AUMN off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below $3.25 a share.

This stock has some serious short-squeeze potential if it breakout triggers soon, since the current short interest as a percentage of its float is pretty high at 12.8%. Look for the bears to cover some of their bets if AUMN can start to spike higher off its recent lows.

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