BALTIMORE (Stockpickr) -- Everybody loves a bargain. Maybe that's what's so appealing about trading stocks with price tags under $10. And as we close out February's trading, there are some big gains to be made in the lowest-priced tickers.
One thing's for sure: Low-priced stocks tend to see higher trading volumes than other stocks of similar capitalization. That means that the potential for powerful breakouts is a lot bigger in low-priced names. To be clear, a low stock price isn't the same thing as a cheap valuation. In fact, by itself, share price isn't a very useful metric at all. But that doesn't change the fact that the setups in names priced under $10 tend to be more explosive than their pricier peers.
So today, we're taking a technical look at five new trades priced under $10.
For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
Without further ado, let's take a look at five technical setups worth trading now.
Lloyds Banking Group
First up is Lloyds Banking Group (LYG), a name that's been a serial outperformer of late. In the last 12 months, London-based Lloyds has rallied more than 63%, blowing the S&P 500's otherwise impressive year out of the water. But even if you missed the move, LYG looks ready to start on another leg higher. Here's how to trade it.
Lloyds Banking Group is currently forming a symmetrical triangle pattern, a setup that's also known as a "coil." The symmetrical triangle is made by a pair of trend lines that are converging at approximately the same rate. The buy signal comes on a breakout to the topside of the channel, currently right at the $5.60 level. If shares can take out $5.60, then we've got a strong indication that buyers have regained control of shares.
Relative strength has been trending higher for LYG since last summer, and it's even maintained its uptrend during this most recent consolidation. Since the 50-day moving average has been a stellar proxy for the lower trendline of LYG's triangle, it's a good place to put a protective stop when the trade triggers.