5 Stocks Under $10 Set to Soar on Big Breakouts: Charts

 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 monster movers in the under-$10 complex from Wednesday, including MELA Sciences  (MELA), which exploded higher by 59.6%; Alexco Resource  (AXU), which jumped sharply higher by 38.3%; Great Basin Scientific  (GBSN), which surged to the upside by 29.3%; and Capnia  (CAPN), which spiked sharply higher by 27%. 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.

Marchex


One under-$10 stock that's starting to move within range of triggering a major breakout trade is Marchex  (MCHX), which operates as a mobile and call advertising technology company in the U.S. and Canada. This stock has been hit hard by the sellers over the last six months, with shares down large by 49.5%.

If you take a glance at the chart for Marchex, you'll notice that this stock has formed a major bottoming chart pattern over the last two months, with shares finding buying interest each time it has dropped below $4 a share. Shares of MCHX spiked sharply higher on Wednesday back above its 50-day moving average of $4.21 a share during an environment where the general market struggled to close higher. That spike is now quickly pushing shares of MCHX within range of triggering a major breakout trade above a key downtrend line that dates back to last December.

Market players should now look for long-biased trades in MCHX if it manages to break out above some key near-term overhead resistance levels at $4.46 to $4.59 a share and then above some more resistance at $4.66 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 214,373 shares. If that breakout develops soon, then MCHX will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $5.26 a share. Any high-volume move above $5.26 will then give MCHX a chance to re-fill some of its previous gap-down-day zone from last September that started near $8 a share.

Traders can look to buy MCHX off weakness to anticipate that breakout and simply use a stop that sits right below $4 a share or around $3.80 a share. One can also buy MCHX 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.

Cardica


Another under-$10 stock that's quickly pushing within range of triggering a big breakout trade is Cardica  (CRDC), which designs, manufactures and markets automated anastomotic systems for use by cardiac surgeons to perform coronary bypass surgery in the U.S. and internationally. This stock has been taken to the woodshed by the sellers over the last six months, with shares down sharply by 41.9%.

If you take a look at the chart for Cardica, you'll see that this stock has possibly put in a hard bottom over the last month and change, with shares finding buying interest each time it has pulled back just below 50 cents per share. Shares of CRDC have now started to spike higher off those support levels and it's quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels. Shares of CRDC also flirted with its 50-day moving average of 62 cents per share on Wednesday as the stock saw strong upside volume flows.

Market players should now look for long-biased trades in CRDC if it manages to break out above some key near-term overhead resistance levels at 63 to 64 cents per share and then above more resistance at 68 cents per share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action 271,233 shares. If that breakout begins soon, then CRDC will set up to re-test or possibly take out its next major overhead resistance levels at 74 to around 85 cents per share, or even its 200-day moving average of 90 cents per share to $1 a share.

Traders can look to buy CRDC off weakness to anticipate that breakout and simply use a stop that sits just below some near-term support levels at 55 cents per share or even 50 cents per share. One can also buy CRDC off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

PDL BioPharma

One under-$10 biotechnology stock that's starting to trend within range of triggering a big breakout trade is PDL BioPharma  (PDLI), which manages a portfolio of patents and royalty assets in the U.S. and Europe. This stock has been under control of the sellers over the last six months, with shares trading off by 27.3%.

If you take a glance at the chart for PDL BioPharma, you'll see that this stock has been downtrending over the last five months, with shares moving lower from its high of $8.26 to its recent low of $6.38 a share. During that downtrend, shares of PDLI have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of PDLI have now started to rebound off that $6.38 low and it's beginning to move within range of triggering a big breakout trade above a key downtrend line that dates back to last December.

Traders should now look for long-biased trades in PDLI if it manages to take out its 50-day moving average of $7.16 a share and then once it clears some key near-term overhead resistance levels at $7.25 to around $7.30 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 3.29 million shares. If that breakout gets started soon, then PDLI will set up to re-test or possibly take out its next major overhead resistance levels at $7.60 to $7.79 a share, or even $8.05 to its 200-day moving average of $8.08 a share. Any high-volume move above $8.08 to $8.30 will then give PDLI a chance to make a run back towards $9 to $9.50 a share.

Traders can look to buy PDLI off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $6.57 to $6.38 a share. One can also buy PDLI off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.



Five9


An under-$10 technology stock that's starting to trend within range of triggering a near-term breakout trade is Five9  (FIVN), which provides cloud software for contact centers in the U.S. and internationally. This stock has been hit hard by the bears over the last six months, with shares off sharply by 28.5%.

If you look at the chart for Five9, you'll see that this stock formed a triple bottom chart pattern over the last month and change, after shares found buying interest at $3.70, $3.64 and $3.72 a share. Following that bottom, shares of FIVN have started to spike sharply higher with the stock moving back above its 50-day moving average and above a key downtrend line that dated back to last November. Shares of FIVN have now back tested that breakout and so far it has held its 50-day moving average. Shares of FIVN bounced notably higher on Wednesday and it's now quickly moving within range of triggering a near-term breakout trade above some key overhead resistance levels.

Market players should now look for long-biased trades in FIVN if it manages to break out above some key overhead resistance levels at $4.45 to $4.50 a share and then above some more resistance at $4.71 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 volume of 183,748 shares. If that breakout materializes soon, then FIVN will set up to re-test or possibly take out its next major overhead resistance levels at $5.04 to its 200-day moving average of $5.44 a share, or even $5.74 to $6 or $6.50 a share.

Traders can look to buy FIVN off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4 a share or even around $3.70 a share. One can also buy FIVN 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.

Calix

One more under-$10 technology stock that's starting to trend higher within range of triggering a near-term breakout trade is Calix  (CALX), which develops, markets and sells broadband communications access systems and software for fiber and copper-based network architectures that enable communications service providers to transform their networks and connect to their residential and business subscribers. This stock has been smacked lower by sellers over the last six months, with shares down notably by 16.5%.

If you take a glance at the chart for Calix, you'll see that this stock recently gapped down sharply from $10.63 a share to under $9 a share with heavy downside volume. Following that move, shares of CALX went on tag a new low of $8.09 a share breaking its gap-down-day low of $8.45 a share. Now shares of CALX have started to rebound off that $8.09 low and it's beginning to trend within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in CALX if it manages to break out above some key near-term overhead resistance levels at $8.87 to $9 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action 338,027 shares. If that breakout gets going soon, then CALX will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $9.15 a share to its 200-day moving average of $9.29 a share, or even $9.50 a share. Any high-volume move above $9.50 will then give CALX a chance to re-fill some of its previous gap-down-day zone from early February that started at $10.63 a share.

Traders can look to buy CALX off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $8.23 to $8.09 a share. One can also buy CALX 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.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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