4 Stocks Under $10 to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

ServiceSource International

ServiceSource International (SREV) provides recurring revenue management, maintenance, support and subscription for technology and technology-enabled health care and life sciences companies. This stock closed up 8% to $3.61 in Thursday's trading session.

Thursday's Range: $3.21-$3.62
52-Week Range: $3.16-$13.69
Thursday's Volume: 5.31 million
Three-Month Average Volume: 1.15 million

From a technical perspective, SREV jumped sharply higher here right above some near-term support at $3.16 with monster upside volume flows. This strong spike to the upside on Thursday is quickly pushing shares of SREV within range of triggering a major breakout trade. That trade will hit if SREV manages to take out some key near-term overhead resistance levels at $3.63 to its gap-down-day high from July at $3.71 with high volume.

Traders should now look for long-biased trades in SREV as long as it's trending above some key near-term support at $3.16 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.15 million shares. If that breakout materializes soon, then SREV will set up to re-fill some of its previous gap-down-day zone from July that started at $4.50. Any high-volume move above $4.50 to $4.64 will then give SREV a chance to tag $ 6 to $5.50.

Idera Pharmaceuticals

Idera Pharmaceuticals (IDRA) , a clinical stage biotechnology company, is engaged in the discovery and development of novel therapeutics that modulate immune responses through toll-like receptors in the U.S. This stock closed up 4.6% to $2.69 in Thursday's trading session.

Thursday's Range: $2.52-$2.69
52-Week Range: $1.51-$6.87
Thursday's Volume: 786,000
Three-Month Average Volume: 1.49 million

From a technical perspective, IDRA ripped sharply higher here right off some near-term support at $2.50 with lighter-than-average volume. This stock has been consolidating and trending sideways over the last two months, with shares moving between $2.38 on the downside and $3.01 on the upside. Shares of IDRA are now starting to move within range of triggering a near-term breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if IDRA manages to take out its 50-day moving average of $2.78 and then once it clears more key resistance levels at $2.90 to $3.01 with high volume.

Traders should now look for long-biased trades in IDRA as long as it's trending above support at $2.50 or above $2.38 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.49 million shares. If that breakout starts soon, then IDRA will set up to re-test or possibly take out its next major overhead resistance levels at $3.32 to $3.50, or even $3.88 to $4.

NF Energy Saving

NF Energy Saving (NFEC) , through its subsidiaries, is engaged in the production of heavy industrial components and products in the People's Republic of China. This stock closed up 7% to $2.89 a share in Thursday's trading session.

Thursday's Range: $2.66-$3.00
52-Week Range: $0.82-$3.10
Thursday's Volume: 224,000
Three-Month Average Volume: 216,122

From a technical perspective, NFEC ripped sharply higher here right above its 50-day moving average of $2.53 with above-average volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $2.15 to its intraday high of $3. During that uptrend, shares of NFEC have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NFEC within range of triggering a major breakout trade. That trade will hit if NFEC manages to take out Thursday's intraday high of $3 to its 52-week high at $3.10 with high volume.

Traders should now look for long-biased trades in NFEC as long as it's trending above its 50-day at $2.53 or above $2.40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 216,122 shares. If that breakout gets underway soon, then NFEC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $4 to $4.50.

DryShips

DryShips (DRYS) , provides ocean transportation services for drybulk and petroleum cargoes and offshore drilling services. This stock closed up 4% to $3.36 a share in Thursday's trading session.

Thursday's Range: $3.21-$3.36
52-Week Range: $2.14-$5.00
Thursday's Volume: 9.72 million
Three-Month Average Volume: 5.21 million

From a technical perspective, DRYS ripped higher here and moved back above its 200-day moving average of $3.34 with monster upside volume flows. This stock recently broke out above some near-term overhead resistance at $3.07 and its 50-day moving average at $3.10 with strong upside volume. The spike higher on Thursday for DRYS is quickly pushing this stock within range of triggering another big breakout trade. That trade will hit if DRYS manages to clear Thursday's intraday high of $3.36 to some more key overhead resistance at $3.55 with high volume.

Traders should now look for long-biased trades in DRYS as long as it's trending above Thursday's intraday low of $3.20 or above its 50-day at $3.10 and then once it sustains a move or close above those breakout levels with volume that hits near or above 5.21 million shares. If that breakout develops soon, then DRYS will set up to re-test or possibly take out its next major overhead resistance levels at $4.37 to its 52-week high at $5.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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