DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for 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 big movers in the under-$10 complex from Thursday, including Everyware Global (EVRY), which is exploding higher by 35%; Eltek (ELTK), which is ripping to the upside by 6.9%; (CXDC), which is trending higher by 6.1%; and Ikanos Communications (IKAN), which is moving up by 5.2 %. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
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.
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.
One under-$10 health care stock that's starting to trend within range of triggering a major breakout trade is Atossa Genetics (ATOS), which focuses on the development and marketing of cellular and molecular diagnostic risk assessment products for breast cancer in the U.S. This stock has been trending hot over the last three months, with shares up sharply by 42%.
If you take a glance at the chart for Atossa Genetics, you'll see that this stock has been uptrending over the last two months, with shares moving higher from its low of $1.35 to its recent high of around $1.93 a share. During that uptrend, shares of ATOS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ATOS within range of triggering a major breakout trade above some key near-term overhead resistance levels. Make note that ATOS is also counter-trending higher today while the overall market is pulling back sharply.
Traders should now look for long-biased trades in ATOS if it manages to break out above some near-term overhead resistance levels at $1.85 to $1.87 a share and then above its 200-day moving average at $1.91 to more key overhead resistance at $1.93 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 469,589 shares. If that breakout gets underway soon, then ATOS will set up to re-test or possibly take out its next major overhead resistance levels at $2.36 to $2.50, or even $3 to $3.28 a share. Any high-volume move above $3.28 will then give ATOS a chance to re-fill some of its previous gap-down-day zone from October that started just above $5 a share.
Traders can look to buy ATOS off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.66 to its 50-day moving average at $1.60 a share or even near $1.58 to $1.50 a share. One can also buy ATOS off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.