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 sod risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the big movers to the upside in the under-$10 complex from Wednesday, including Superconductor Technologies (SCON) , which ripped up by 49%; Denbury Resources (DNR) , which soared by 33.5%; Lucas Energy (LEI) , which spiked by 27.5%; and Stone Energy (SGY) , which jumped by 27.4%. 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. These are also the exact type of stocks that I love to trade and alert in real time. 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 stocks, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 stocks 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 healthcare player that's starting to spike within of triggering a near-term breakout trade is Novadaq Technologies (NVDQ) , which develops, manufactures and markets fluorescence imaging products for use by surgeons in the operating room and other clinical settings in the U.S. and internationally. This stock has been under selling pressure over the last three months, with shares off sharply by 35.1%.
If you take a glance at the chart for Novadaq Technologies, you'll notice this stock has been downtrending badly over the last three months, with shares falling sharply off its high of $12.74 a share to its new 52-week low Wednesday at $7.20 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action.
That said, shares of Novadaq Technologies managed to rip sharply higher on Wednesday after printing that $7.20 low with strong upside volume flows. Volume for that trading session registered over 1.10 million shares, which is well above its three-month average action of 275,127 shares. This high-volume spike to the upside is now quickly pushing this stock 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 shares of Novadaq Technologies if it manages to break out above some near-term overhead resistance levels at $8 to $8.50 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 of 275,127 shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $9.25 to $9.75, or even its 50-day moving average of $10.17 to its 200-day moving average of $10.42 a share.
Traders can look to buy this stock off weakness to anticipate that breakout and simply use a stop that sits right below its new 52-week low of $7.20 a share. One can also buy shares of Novadaq Technologies 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.