Stock Quotes in this Article: DEPO, HALO, SQNM, GNOM, NAVB

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street when certain stocks trading near or 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 hot movers in the under-$10 complex from Wednesday, including Galena Biopharma (GALE), which skyrocketed by 16%; Swisher Hygiene (SWSH), which soared by 11.6%; ParkerVision (PRKR), which ripped to the upside by 11.3%; and Pluristem Therapeutics (PSTI), which finished up 9.8%. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

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Gale Biopharma happens to be a biotechnology stock I recently flagged for its bullish technical setup when it was trading at just $1.58 a share. Shares of GALE ripped higher on Wednesday with the stock hitting an intraday high of $2.30 a share on monster volume of 21.8 million shares.

ParkerVision is another stock I was all over from much lower prices, flagging it for its breakout potential when it was trading at just $1.62 a share.

I’m not as eager to recommend investing long term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren’t great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.

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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 trade higher from current levels.

Complete Genomics

One under-$10 stock that’s within range of triggering a major breakout trade is Complete Genomics (GNOM), a life sciences company that has developed and commercialized a DNA sequencing platform. This stock has traded virtually flat so far in 2012, with shares down around 1.7%.

If you take a look at the chart for Complete Genomics, you’ll see that this stock hit a near-term bottom in May at around $1.57 a share. After tagging that bottom, shares of GNOM have started to uptrend and make higher lows and higher highs, which is bullish technical price action. Also, during the last week we’ve seen heavy upside volume hit the chart for GNOM as the stock has risen from around $2 to its recent high of $3.34 a share. That move has now pushed GNOM within range of triggering a major near-term breakout trade.

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Market players should now look for long-biased trades in GNOM if it can manage to trigger a breakout trade above some near-term overhead resistance at $3.34 to $3.50 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 1.95 million shares. If that breakout hits soon, then GNOM has a great chance of re-testing and possibly taking out its next major overhead resistance levels at $4.53 to $5.42 a share. Keep in mind that a high-volume move over $3.34 will mean GNOM has pushed back above its 200-day moving average of $3.23 a share, which is technically bullish.

If you like the setup here for GNOM here, then I would look to buy this stock off weakness and anticipate the breakout. I would use a stop near $2.50 a share, or possibly closer to the 50-day moving average of $2.09 if we get a bigger selloff soon. I would prefer to buy off strength once GNOM takes out $3.34 to $3.50 with heavy volume, and then simply use a stop right below the 200-day at $3.23 a share.

Keep in mind that the current short interest as a percentage of the float for GNOM is rather high at 8%. This stock also has a ridiculously low tradable float of just 19.35 million shares. Any future breakout could easily trigger a monster short-squeeze, so keep this stock on your trading radar.

Navidea Biopharmaceuticals

Another under-$10 stock in the biotechnology and drugs complex that looks ready to trigger a near-term breakout trade is Navidea Biopharmaceuticals (NAVB), which is focused on the development and commercialization of precision diagnostic agents. This stock has soared over 60% in just the last three months.

If you take a look at the chart for Navidea Biopharmaceuticals, you’ll see that this stock triggered a major breakout back in late June once it smashed through some previous overhead resistance at $3.47 to 3.55 a share with monster upside volume. Following that breakout, shares of NAVB soared to its recent high near $4.45 a share. During that monster run, the upside volume for NAVB has been off the charts for most of June and July. Since hitting that high at $4.45, shares of NAVB have started to move sideways between $4.40 and $4.09 a share. A move outside of that range will now setup the next major trend for NAVB.

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Traders should now look for long-biased trades in NAVB if it can manage to trigger a breakout trade above some near-term overhead resistance at $4.45 a share with high volume. Look for volume off a sustained move or close above $4.45 that registers near or above its three-month average action of 548,951 shares. If that breakout triggers soon, then NAVB will have a great chance of re-testing and possibly taking out its 2011 high of $5.48 a share.

If you’re in the bull camp on NAVB, then one could look to buy this stock off any weakness and simply anticipate the breakout. If you get long off weakness, then use a stop at around $4.09 or even down to $3.80 a share. I would prefer to get long off strength once NAVB takes out $4.45 with high volume. If you get long off strength, then use a stop just below $4.09 a share in case it’s not ready to launch just yet.

Make note that the current short interest as a percentage of the float for NAVB is extremely high at 17.4%. This company has a major catalyst on the horizon, since it will meet with the FDA on September 10 for the possible approval of its drug candidate Lymphoseek. This product is used for intraoperative lymphatic mapping. We could easily see NAVB short-squeeze huge right into that PDUFA date, so keep this one on watch.

Sequenom

Another under-$10 that looks poised for higher prices here is Sequenom (SQNM), which provides products, services, diagnostic testing, applications, and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications and agricultural and livestock research. This stock is off to a slow start in 2012, with shares down by around 12% so far.

If you take a look at the chart for Sequenom, you’ll notice that this stock has been crushed by the bears since early May, when the stock dumped from a high of $5.83 to a recent low of $3.45 a share. During that sharp move lower, shares of SQNM have consistently made lower highs and lower lows, which is bearish technical price action. That said, shares of SQNM have now started to make higher lows and some higher highs, as the stock as rebounded off that $3.45 low. That recent rebound, and possible trend change, is quickly pushing SQNM within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in SQNM if it can manage to trigger a breakout trade above some near-term overhead resistance at $4.17 to $4.34 a share, and then some more resistance at $4.57 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 3,593,210 shares. If we get that action soon, then SQNM could easily setup to spike big back towards its May highs at $5.44 to $5.83 a share. Make note that if SQNM takes out $4.34 a share, then it will push the stock through both its 50-day and 200-day moving averages, which is technically bullish price action.

If you’re bullish on SQNM, then one could buy off weakness and simply use a stop near its previous support zones at $3.64 to $3.45 a share. If you get long off weakness, then I would add to the position once SQNM clears those breakout levels mentioned above with high volume.

This stock is a favorite among the short-sellers. The current short interest as a percentage of the float for SQNM is extremely high at 26.3%. If we see volume start to move into SQNM and the stock takes out those near-term resistance levels, then a massive short-squeeze could easily kickoff that sends this stock skyrocketing.

DepoMed

Another under-$10 name in the biotechnology and drugs complex that looks ready to trigger a major breakout trade is DepoMed (DEPO), a specialty pharmaceutical company initially focused on neurology, pain and other diseases of the central nervous system. This stock is off to a decent start so far in 2012, with shares up over 8%.

If you take a look at the chart for DepoMed, you’ll see that this stock was whacked by the bears back in late April, with shares dropping from a high of $6.64 to a recent low of $4.75 a share. During that downtrend, shares of DEPO were consistently making lower highs and lower lows, which is bearish technical price action. That said, DEPO has started to rebound sharply since hitting that $4.75 low, with the stock now making higher lows and setting up for higher highs. Shares of DEPO have now moved into position to trigger a major near-term breakout trade.

Traders should now look for long-biased trades in DEPO if it can manage to trigger a break out above some near-term overhead resistance at $5.75 to $5.86 a share with high volume. Look for volume off a sustained move or close above those levels that hits near or above its three-month average action of 360,300 shares. If that breakout triggers soon, then DEPO could easily re-test and possibly take out its next major overheard resistance levels at $6.64 to $6.70 a share, or possibly even $7.15 a share.

If you like the setup here for DEPO, then one could get long off any weakness and simply use a stop just below its 50-day at $5.38 a share, or even right below $5.25 a share. One could also wait for strength and buy once DEPO takes out $5.75 to $5.86 with heavy volume, and then just use a stop right below its 50-day moving average of $5.38 a share.

This is another favorite name among the bears, since the current short interest as a percentage of the float for DEPO is high at 7.1%. If that breakout triggers soon, then we should see a solid short-covering rally materialize for DEPO.

Halozyme Therapeutics

One more under-$10 biotech stock that looks ready to trigger a major breakout trade is Halozyme Therapeutics (HALO), a biopharmaceutical company whose research focuses on human enzymes that transiently modify tissue under the skin to facilitate injection of other therapies or correct diseased tissue structures for clinical benefits. This stock is virtually flat so far in 2012, with shares off by around 1.5%.

If you take a look at the chart for Halozyme Therapeutics, you’ll see that this stock gapped down big back in April from around $11 to $7.51 a share with monster volume. Following that sharp move lower, shares of HALO have started to rebound strong and uptrend towards its recent high of $9.83 a share. During that uptrend, shares of HALO have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed HALO within range of triggering a major breakout trade.

Traders should now look for long-biased trades in HALO if it can manage to trigger a near-term breakout trade above some overhead resistance levels at its 200-day moving average of $9.39 a share, and above some more resistance at $9.83 a share with high volume. Look for a sustained move or close above those levels with volume that’s near or above its three-month average volume of 792,700 shares. If we get that action soon, then HALO could re-fill the rest of that gap and take out $11.50 a share, and then possibly re-test its March high of $13.50 a share.

One could be a buyer of HALO off weakness to anticipate that breakout, and simply use a stop just below its 50-day moving average of $8.45 a share. If you buy off weakness, then I would add to the position once $9.39 to $9.83 is taken out with heavy upside volume. One could also buy off strength and get long once those breakout levels are taken out with volume, and simply use a stop just below $9.39 a share.

The short-sellers are active in this stock, since the current short interest as a percentage of the float for HALO is very high at 11.8%. If that breakout triggers soon, then a big short-squeeze could develop as HALO moves back into that gap from back in April.

To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up to Explode portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.