Stock Quotes in this Article: BPZ, FST, NBS, GRPN, TROV

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street that 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 Thursday, including Orexigen Therapeutics (OREX), which spiked higher by 16.7%; Innovative Solutions and Support (ISSC), which soared by 11.5%; BioDelivery Sciences (BDSI), which trended up 11.5%; and LCA-Vision (LCAV), which closed up 11%. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

>>5 Big Stocks Set to Slingshot Higher

One low-priced stock that I recently flagged that went on to explode to the upside was Peregrine Pharmaceuticals (PPHM). On July 12, I highlighted PPHM in “4 Biotech Stocks Under $10 Moving Higher” at around 89 cents per share. I was bullish on PPHM, and I liked how the stock was starting to move back above its 200-day moving average with high volume. I mentioned that PPHM was setting up to trigger a near-term breakout trade once it took at $1.01 to $1.14 a share with high volume.

Guess what happened? Shares of PPHM went on to trigger that breakout over $1.01 to $1.14 a share with massive upside volume, and it went on to hit a recent high of $3.21 a share in mid-August. That’s a ridiculous move in about month for anyone who played the breakout. Now PPHM has some data due out today for its Cancer drug bavituximab, which will be presented at a medical meeting in Chicago. If its data is bullish, then PPHM could break out again above $3.21 a share, so watch this name following the data release today.

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.

>>5 Stocks Everyone Hates – But You Should Love

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.

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 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.

 

 

TrovaGene

One under-$10 stock in the biotechnology and drugs complex that’s trading very close to triggering a near-term breakout trade is TrovaGene (TROV), a development stage molecular diagnostic company focused on developing and marketing urine-based nucleic acid tests for patient/disease screening and monitoring in the U.S. This stock has been smacked by the sellers so far in 2012, with shares down by over 25%.

If you take a look at the chart for TrovaGene, you’ll notice that this stock formed a double-bottom chart pattern back in late August at around $2.11 to $2.09 a share. Following that bottom, shares of TROV have started to soar and move within range of triggering a near-term breakout trade. The recent spike which has pushed the stock above $2.70 a share has also moved TROV within range of taking out its 200-day moving average of $2.86 a share.

>>5 Technical Trades Under $10

Traders should now look for long-biased trades in TROV once it breaks out above some near-term overhead resistance at $2.86 a share with high volume. Look for a sustained move or close above $2.86 a share with volume that hits near or above its three-month average action of 56,492 shares. If that breakout triggers soon, TROV will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at its 200-day moving average of $3.78 a share, or possibly even $4 to $4.24 a share.

Traders can now look to buy TROV off any weakness to anticipate that breakout and simply use a stop that sits just below some near-term support at $2.46 a share. One could also buy off strength once TROV takes out $2.86 a share with volume and then simply use that same stop below $2.46 a share.

BPZ Resources

Another under-$10 stock hat looks poised for higher prices is BPZ Resources (BPZ), which is focused on the exploration, development and production of oil and natural gas in Peru and Ecuador. This stock is down modestly so far in 2012, with shares off by around 9%.

If you take a look at the chart for BPZ Resources, you’ll see that this stock has been downtrending hard from its April high of $4.64 to its recent low of $2.01 a share. During that downtrend, shares of BPZ were consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has now started to move in a sideways trading pattern for the last month, between $2.20 on the downside and $2.60 on the upside. A move outside of that range will likely setup the next major trend for BPZ.

>>9 Oil Stocks With Hot Prospects

Market players should now look for long-biased trades in BPZ once it triggers a break out above some near-term overhead resistance levels at $2.60 to $2.73 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 1.3 million shares. If that breakout triggers soon, then BPZ has a great chance to re-test or possibly take out its next significant overhead resistance levels at $3.04 to $3.25 a share. If $3.25 gets taken out with volume, then BPZ could easily re-test its April high of $4.64 a share.

Traders can look to buy BPZ off any weakness and simply use a stop that sits just below $2.20 a share. One could also buy off strength once BPZ clears $2.60 to $2.73 a share, with a stop that’s right below its 50-day moving average of $2.35 a share. I would add to either position if BPZ takes out $3.25 with high volume.

Forest Oil

Another under-$10 stock in the oil and gas complex that’s moving within range of triggering a near-term breakout trade is Forest Oil (FST), an independent oil and gas player engaged in the acquisition, exploration, development and production of oil, natural gas and natural gas liquids in North America. This stock has been smashed by the bears so far in 2012, with shares down by over 40%.

If you take a look at the chart for Forest Oil, you’ll notice that this stock has been uptrending strong off its recent low of $5.68 a share hit in mid-July to its current price of around $8 a share. During that uptrend, shares of FST have been consistently making higher lows and higher highs, which is bullish technical price action. That move has quickly pushed FST within range of triggering a near-term breakout trade.

>>5 Stocks George Soros Loves Right Now

Traders should now look for long-biased trades in FST once it manages to break out above some near-term overhead resistance levels at $8.06 to $8.10 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 5.1 million shares. If that breakout triggers soon, then FST has a great chance of re-testing or possibly taking out its next major overhead resistance levels $9.15 to $10.81 a share.

Traders can look to buy FST off weakness with a stop that sits just below its 50-day moving average of $7.09 a share. One could also just buy FST off strength once it takes out $8.06 to $8.10 a share with high volume, and then simply use a stop just below $7.50 a share.

Groupon

An under-$10 name in the discount deals complex that’s trading very close to triggering a near-term breakout trade is Groupon (GRPN), a local e-commerce marketplace company that connects merchants to consumers by offering goods and services at a discount. This stock has been annihilated by the sellers so far in 2012, with shares down by over 75%.

If you take a look at the chart for Groupon, you’ll notice that this stock has been downtrending badly for the last six months, with shares plunging from over $16 a share to its recent low of $4. During that downtrend, shares of GRPN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, GRPN have now entered oversold territory since its current relative strength index reading is below 30. This stock has also started to find some buying interest near $4 a share. It’s possible that a near-term bottom could be in, and GRPN is now setting up to rebound off of oversold territory.

>>5 Stocks With Big Insider Buying

Market players should look for long-biased trades in GRPN if it can manage to trigger a break out above some near-term overhead resistance levels at $4.36 to $4.70 a share with high volume. Look for a sustained move or close above those levels with volume that tracks in close to or near its three-month average action of 10.8 million shares. If that breakout triggers soon, then GRPN could see a powerful bounce that takes it back towards its 50-day moving average of $6.54 a share, or possibly even higher towards $8 a share.

Traders can look to get long GRPN off weakness, and simply use a stop that sits just below that major near-term support level at $4 a share. One could also get long once GRPN takes out $4.36 to $4.70 with volume, and simply use a stop just below Thursday’s low of $4.14 a share.

Neostem

One more under-$10 stock in the biotechnology and drugs complex that’s trading within range of a major breakout trade is Neostem (NBS), which is involved in collecting, storing, manufacturing, therapeutic developing, and transporting cells for cell based medicine and regenerative science. This stock has been on fire so far in 2012, with shares up over 40%.

If you take a look at the chart for Neostem, you’ll notice that this stock has been uptrending very strong for the past six months, with shares skyrocketing from a low of 30 cents per share to its August high of 84 cents per share. During that strong uptrend, shares of NBS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed NBS within range of triggering a major breakout trade.

Traders should now look for long-biased trades in NBS once it manages to break out above some near-term overhead resistance levels at 75 to 84 cents per share, and then above its 52-week high of 90 cents per 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 1,228,630 shares. If that breakout hits soon, then NBS could re-test or possibly take out its next major overheard resistance levels at 96 cents to $1.50 a share.

Traders can look to buy NBS off weakness and simply anticipate that breakout, with a stop that sits just below its 50-day moving average of 66 cents per share. You could even give NBS room down towards 58 cents per share if you get long off a large pullback. One could also buy NBS off strength once it takes out 75 cents to 84 cents, and then use a stop just below 75 to 70 cents per share. I would add aggressively to NBS once it clears 90 to 96 cents per share with volume.

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.

RELATED LINKS:

>>Why I Like Homebuilders -- But Hate the ETFs
>>5 Stocks to Buy to Be Like Buffett

>>5 Big Stocks That Can't Afford a Deep Recession

Follow Stockpickr on Twitter and become a fan on Facebook.

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.