Delafield, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less 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 Thursday, including Infinera (INFN), which is skyrocketing higher by 25%; Geron (GERN), which is soaring higher by 19%; Netlist (NLST), which is ripping higher by 14%; and You On Demand (YOD), which is spiking sharply higher by 12%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
One low-priced stock that recently spiked sharply higher after I featured it was apparel player Mecox Lane (MCOX), which I highlighted in Jan. 24's "5 Stocks Poised for Breakouts" at around $4.10 per share. I mentioned in that piece that shares of Mecox Lane had been trending sideways and consolidating for the last four months, with shares moving between $3.10 on the downside and $4.85 on the upside. This stock was just starting to trend back above both its 50-day and 200-day moving averages and it was moving within range of triggering a big breakout trade above some key overhead resistance levels at $4.57 to $4.85 a share.
Guess what happened? Shares of Mecox Lane started to flirt with those breakout levels over the last couple of trading sessions with strong upside volume flows. This stock took those levels out with authority this morning after the stock tagged an intraday high of $5.32 a share with strong upside volume. That represents a big gain of 30% from the time of the original article. think this stock still has big upside ahead of it if MCOX can manage to take out Thursday's high of $5.32 a share with strong volume soon.
Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.
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.
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.