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 monster movers to the upside in the under-$10 complex from Wednesday, including Prima Biomed (PBMD), which exploded higher by 269%; IsoRay (ISR), which screamed to the upside by 93.7%; CymaBay Therapeutics (CBAY), which soared higher by 31.6%; and Great Basin Scientific (GBSN), which ripped higher by 26.1%. 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 biotechnology player that's starting to spike within range of triggering a major breakout trade is Achaogen (AKAO), which discovers, develops and commercializes antibacterials to treat multi-drug resistant gram-negative infections in the U.S. This stock has been slammed lower by the bears over the last three months, with shares off large by 50.6%.
If you take a glance at the chart for Achaogen, you'll see that this stock has been downtrending badly for the last six months, with shares plunging lower from its high near $14.50 a share to its new 52-week low of $5.30 a share. During that downtrend, shares of AKAO have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AKAO have now started to rebound off that $5.30 low with some above-average volume flows. That rebound is now starting to push shares of AKAO within range of triggering a major breakout trade above a key downtrend line.
Market players should now look for long-biased trades in AKAO if it manages to clear that downtrend line that will trigger above $5.76 to $6.07 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 155,502 shares. If that breakout gets going soon, then AKAO will set up to re-test or possibly take out its next major overhead resistance levels at $6.59 to $7 a share, or even its 50-day moving average of $7.48 to $8 a share.
Traders can look to buy AKAO off weakness to anticipate that breakout and simply use a stop that sits right around that new 52-week low of $5.30 a share. One can also buy AKAO 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.
Another under-$10 biopharmaceutical player that's starting to trend within range of triggering a near-term breakout trade is Synergy Pharmaceuticals (SGYP), which focuses on the development of drugs to treat gastrointestinal disorders and diseases. This stock has been in play with the bulls over the last three months, with shares trending sharply higher by 39.3%.
If you take a look at the chart for Synergy Pharmaceuticals, you'll notice that this stock gapped up sharply higher earlier this week from $3.40 to $4.17 a share with monster upside volume. Following that move, shares of SGYP have pulled back a bit, but for the most part the stock has held or found buying interest right around that gap-up day low just under $3.80 a share. Shares of SGYP formed a bullish hammer candle pattern on Wednesday and this stock now looks ready to triggering a near-term breakout trade.
Market players should now look for long-biased trades in SGYP if it manages to break out above some key near-term overhead resistance levels at around $4.05 to $4.17 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 2 million shares. If that breakout materializes soon, then SGYP will set up to re-test or possibly take out its next major overhead resistance levels at $4.50 to its 52-week high of $4.68 a share. Any high-volume move above those levels will then give SGYP a chance to tag $5 to $5.50, or even $6 a share.
Traders can look to buy SGYP off weakness to anticipate that breakout and simply use a stop that sits just below $3.80 a share. One can also buy SGYP 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.