Stock Quotes in this Article: AEZS, DVAX, LPHI, ROSG, SZYM

WINDERMERE, Fla. (Stockpickr) -- Every day on Wall Street, there are stocks trading for $10 a share or less that 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 iGo (IGOI), which exploded higher by 31%; Acura Pharmaceuticals (ACUR), which ripped higher by 25%; Jacksonville Bancorp (JAXB), which soared by 20%; and Biolase (BIOL), which trended up by 19.4%. 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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One low-priced stock that’s exploding to the upside today is biotechnology and drugs player OXiGENE (OXGN), which I highlighted in Feb. 5's “3 Stocks Under $5 Making Big Moves” at around $4.28 a share. I mentioned in that piece that shares of OXGN were ripping higher right off some near-term support at $3.96 a share with above-average volume. That action was quickly pushing shares of OXGN within range of triggering a near-term breakout trade. That trade would hit if OXGN took out its 50-day at $4.59 a share and then more overhead resistance at $4.90 a share with volume.

Guess what happened? Shares of OXGN are exploding higher right now by 26% and the stock has triggered that breakout with heavy upside volume. Volume so far today has registered 691,000 shares versus its three-month average daily volume of 21,144 shares. Anyone who bought the stock in anticipation of that breakout is being handsomely rewarded today. What’s great about this move in OXGN is that volume was expanding dramatically to the upside on Tuesday and Wednesday, so this was a high probability play as long as it was trending above some key near-term support at $3.96 a share.

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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.

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 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.

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With that in mind, here’s a look at several under-$10 stocks that look poised to potentially trade higher from current levels.

Rosetta Genomics

One under-$10 stock that’s trending very close to trigger a near-term breakout trade is Rosetta Genomics (ROSG), which develops diagnostic tests and therapeutic tools. This stock has been in play with the bulls during the last three months, with shares up 10%.

This company was hit with some positive news today after data from a study demonstrating the ability of microRNA expression to serve as a biomarker to predict the progression of bladder urothelial carcinoma were published online in the British Journal of Urology International.

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If you take a look at the chart for Rosetta Genomics, you’ll notice that this stock has just started to trend back above its 50-day moving average of $4.60 a share. That move is coming after ROSG has formed a consolidation pattern for the last few weeks at around $4.40 to $4.50 a share. Shares of ROSG are now quickly moving within range of triggering a near-term breakout trade that could send the stock soaring to the upside.

Traders should now look for long-biased trades in ROSG if it manages to break out above some near-term overhead resistance levels at $4.95 to $5 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 volume of 494,200 shares. If that breakout hits soon, then ROSG will set up to re-test or possibly take out its next major overhead resistance levels at $5.50 to $5.98 a share. Any high-volume move above $5.98 will then put its 200-day at $6.29 to $7 or higher into range for shares of ROSG.

Traders can look to buy ROSG off any weakness to anticipate that breakout and then simply use a stop that sits right around some key near-term support at $4.40 a share. One can also buy ROSG off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below its 50-day moving average of $4.60 a share.

This stock has explosive upside potential if that breakout triggers soon, since it’s a favorite target of the short-sellers. The current short interest as a percentage of that float for ROSG is very high at 19.2%. Look for a monster short-squeeze to develop if that breakout triggers soon.

Life Partners

Another under-$10 stock that looks ready to trigger a major breakout trade is Life Partners (LPHI), which is a specialty financial services company and the parent company of Life Partners. This stock is off to a hot start so far in 2013, with shares up sharply by 15.9%.

If you take a look at the chart for Life Partners, you’ll notice that this stock has been trending in a consolidation pattern for the last two months, with shares moving between $2.60 on the downside and $3.16 on the upside. This tight consolidation pattern has formed a massive base for shares of LPHI, and the stock is just now starting to move within range of triggering a major breakout trade above the upper-end of its recent range.

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Market players should now look for long-biased trades in LPHI if it manages to break out above some near-term overhead resistance levels at $2.90 to $3.16 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 82,610 shares. If that breakout hits soon, then LPHI will set up to re-test or possibly take out its next major overhead resistance levels at $3.98 to $4.35 a share. Any high-volume move above $4.35 would then put $5.50 to $6 into range for shares of LPHI.

Traders can look to buy LPHI off any weakness to anticipate that breakout and then simply use a stop that sits close to some near-term support at $2.67 to $2.60 a share. One can also buy off strength once LPHI takes out those breakout levels with volume and then simply use a stop that sits right below its 50-day moving average at $2.68 a share.

This stock sports a decent short interest as a percentage of its float at 8.7%. Make sure to put this name on your breakout trading radar since we could get a decent short-squeeze if it triggers soon.

AEterna Zentaris

Another under-$10 stock that’s trending very close to triggering a major breakout trade is AEterna Zentaris (AEZS), which is focused on endocrine therapy and oncology with expertise in drug discovery, development and commercialization, mainly targeting the North American and European markets. This stock has been on fire so far in 2013, with shares up by 23%.

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If you take a look at the chart for AEterna Zentaris, you’ll notice that this stock has been uptrending strong for the last two months and change, with shares soaring from its low of $1.75 to its recent high of $3.45 a share. During that uptrend, shares of AEZS have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of AEZS have now started to move back above its 200-day moving average of $2.80 a share and are quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in AEZS if it manages to break out above some key overhead resistance levels at $3.45 to $3.55 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 781,921 shares. If that breakout triggers soon, then AEZS will set up to re-test or possibly take out its next major overhead resistance levels at $4.56 to just over $5 a share. Keep in mind that that if AEZS triggers that move it will also have a chance to re-fill some of its previous gap down zone from last October that starts above $3.75 a share.

Traders can look to buy AEZS off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $2.67 a share or around its 50-day at $2.47 a share. One could also buy AEZS off strength once it clears those breakout levels with volume and then simply use a stop that sits just below $3.20 a share.

Dynavax Technologies


Another under-$10 stock that’s starting to move within range of triggering a major breakout trade is Dynavax Technologies (DVAX), which discovers and develops novel products to prevent and treat infectious diseases, asthma and inflammatory and autoimmune diseases. This stock has been hammered by the bears during the last three months, with shares off by 23%.

If you take a look at the chart for Dynavax Technologies, you’ll notice that this stock has been uptrending strong since it gapped down last November from around $5 a share. During that uptrend, shares of DVAX have soared from a low of $2.21 to the recent high of $3.39 a share. As the stock has climbed, it has been mostly making higher lows and higher highs, which is bullish technical price action. Shares of DVAX have been consolidating over the last few weeks right above its 50-day, with shares trending around $3 to $3.20. That move has now pushed shares of DVAX within range of triggering a major breakout trade.

Market players should now look for long-biased trades in DVAX if it manages to break out above some near-term overhead resistance levels at $3.21 to $3.39 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 3,766,200 shares. If that breakout triggers soon, then DVAX will set up to re-fill some of its previous gap down zone that started near $5 a share.

Traders can look to buy DVAX off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day moving average of $2.92 a share. One could also buy DVAX off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below $3 a share. I would add to either position once DVAX takes out its 200-day moving average at $3.84 a share with heavy volume.

This stock has some serious short-squeeze potential if it breaks out soon, since the current short interest as a percentage of its float is very high at 11.2%. If that breakout triggers, then the shorts might not want to be exposed for a fast move into that gap, so put this name on your radar.

Solazyme

One more under-$10 stock that’s trending very close to triggering a near-term breakout trade is Solazyme (SZYM), which is in the business of transforming a range of low-cost plant-based sugars into high-value oils. This stock has been thrashed by the bears during the last six months, with shares off by 39%.

If you take a look at the chart for SZYM, you’ll notice that this stock has just started to trend back above its 50-day moving average of $7.73 a share with solid upside volume. Volume today has already registered 630,000 shares which is just a bit below its three-month average action of 640,387 shares. This move is quickly pushing shares of SZYM within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in SZYM if it manages to break out above some near-term overhead resistance levels at $8.60 to $8.79 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 640,387 shares. If that breakout triggers soon, then SZYM will set up to re-test or possibly take out its next major overhead resistance levels at $9.90 to its 200-day moving average at $10.31 a share. Any high-volume move above its 200-day will then put $11 to $12 into range for shares of SZYM.

Traders can look to buy SZYM off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at its 50-day of $7.83 or at $7.50 a share. One could also buy SZYM off strength once it clears those breakout levels with volume and then simply use a stop that sits just below $8.30 a share.

This is another favorite target of the short-sellers, since the current short interest as a percentage of the float for SZYM is very high at 19.2%. If that breakout triggers soon, then SZYM has some serious short-squeeze potential, so be ready to play this if it hits.

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 technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.