DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sod risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the large movers in the under-$10 complex from Wednesday, including One Horizon Group (OHGI), which exploded higher by 152%; Giga-tronics (GIGA), which ripped large by 61%; Inventergy Global (INVT), which spiked sharply higher by 36%; and Ntelos Holdings (NTLS), which soared big by 30.4%. 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 player that's starting to trend within range of triggering a near-term 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 hammered lower by the sellers over the last six months, with shares down huge by 52%.
If you take a glance at the chart for Cardica, you'll see that this stock recently formed a double bottom chart pattern at 36 cents per share. That bottom is coming after shares of CRDC double topped at 65 cents per share and then plunged lower to that low of 36 cents per share. Shares of CRDC are now starting to trend 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 CRDC if it manages to break out above some near-term overhead resistance levels at 42 to 44 cents per share and then above more resistance at 45 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 306,697 shares. If that breakout triggers soon, then CRDC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of 52 cents per share to 55 cents, or even 60 cents per share.
Traders can look to buy CRDC off weakness to anticipate that breakout and simply use a stop that sits right below that double bottom support level at 36 cents per share. One can also buy CRDC 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.
Another under-$10 specialty pharmaceutical player that's quickly moving within range of triggering a big breakout trade is BioDelivery Sciences (BDSI), which engages in the development and commercialization of pharmaceutical products principally in the areas of pain management and addiction. This stock has been slammed lower by the bears over the last three months, with shares down sharply by 44%.
If you take a look at the chart for BioDelivery Sciences, you'll notice that this stock gapped down sharply lower in March from around $14 a share to below $9.50 a share with heavy downside volume flows. Following that move, shares of BDSI continued to slide lower with the stock recently printing a new 52-week low of $7.28 a share. That said, shares of BDSI ripped to the upside on Wednesday right above that $7.28 low with strong upside volume flows. Volume during that trading session registered over 1.92 million shares, which is well above its three-month average action of 1.11 million shares. That spike is now starting to push shares of BDSI within range of triggering a big breakout trade above a key downtrend line.
Market players should now look for long-biased trades in BDSI if it manages to take out a key downtrend line that will trigger over $8.50 to $9 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 1.11 million shares. If that breakout develops soon, then BDSI will set up to re-test or possibly take out its next major overhead resistance levels at $10 to $10.50 a share, or even $11 a share. Any high-volume move above $11 will then give BDSI a chance to re-fill some of its previous gap-down-day zone from March that started near $14 a share.
Traders can look to buy BDSI off weakness to anticipate that breakout and simply use a stop that sits right around Wednesday's intraday low of $7.79 or close to that 52-week low of $7.28 a share. One can also buy BDSI 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.