Stock Quotes in this Article: ACAD, JASO, SNMX, MEIP, DSS

 WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street that certain stocks trading for $10 a share or less 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 Royale Energy (ROYL), which skyrocketed higher by 67%; DragonWave (DRWI), which soared by 28.3%; Institutional Financial Markets (IFMI), which trended up by 24.1%; and KiOR (KIOR), which ripped to the upside by 15%. 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 been on fire of late and today is biotechnology and drugs player Acadia Pharmaceuticals (ACAD), which I highlighted in March 19's “4 Stocks Under $10 Making Big Moves” at around $6.41 a share. I mentioned in that piece that shares of ACAD were bouncing higher right above its 50-day moving average at that time of $5.98 a share with above-average volume. That spike was quickly pushing ACAD within range of triggering a major breakout trade above the upper-end of its recent sideways chart pattern at $6.67 to $6.88 a share.

Guess what happened? Shares of ACAD broke out above those resistance levels just two trading sessions later on March 21 with massive upside volume. The stock went on to tag $8.81 a share, which represented a massive gain in a very short timeframe for anyone who took that trade. Shares of ACAD pulled back to a recent low of $7.40 a share, but the stock never went lower and violated those original breakout levels at $6.67 to $6.88 a share. Well, this stock is exploding higher again today with shares up over 50% as I write this trading over $12 a share.

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If you’ve been in ACAD from my original call, then now might be a great time to lock in some of those huge profits, since the stock is getting much overbought at current levels. The current relative strength index reading for ACAD is now 86.92, which represents an extremely overbought level.

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.

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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 potentially trade higher from current levels.

MEI Pharma

One under-$10 stock that’s trending very close to trigger a major breakout trade is MEI Pharma (MEIP), which is developing cancer therapeutics based on the central design of naturally occurring compounds called isoflavones. This stock has been off to a hot start in 2013, with shares up 22%.

If you take a look at the chart for MEI Pharma, you’ll notice that this stock recently formed a double bottom at around $7.54 to $7.29 a share, right above its 50-day moving average of $7.31 a share. This stock has started to bounce off those support areas and is now quickly moving within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in MEIP if it manages to break out above some near-term overhead resistance levels at $9.40 to $9.65 a share and then once it takes out more resistance at $10.08 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 81,131 shares. If that breakout triggers soon, then MEIP will set up to re-test or possibly take out its next major overhead resistance levels at $12 to $13.18 a share.

Senomyx

Another under-$10 stock that’s trending within range of triggering a near-term breakout trade is Senomyx (SNMX), which discovers, develops and commercializes flavor ingredients for the packaged food, beverage and ingredient supply industries by including savory and cooling flavors and flavor modulators, such as sweet and salt modifiers and bitter blockers. This stock has been red hot so far in 2013, with shares up 30%.

If you take a look at the chart for Senomyx, you’ll notice that this stock has just started to bounce strongly higher right off its 200-day moving average of $1.99 a share with decent upside volume. This move is coming after shares of SNMX have been downtrending for the last month and change, with shares falling from its high of $2.94 to its recent low of $1.95 a share. If this bounce is signaling that the downside volatility for SNMX is over, then this stock could break out and trend significantly higher.

Market players should now look for long-biased trades in SNMX if it manages to break out above its 50-day moving average of $2.24 a share and then once it takes out more overhead resistance at $2.39 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 204,121 shares. If that breakout hits soon, then SNMX will set up to re-test or possibly take out its next major overhead resistance levels at $2.82 to $2.94 a share.

Any high-volume move above $2.94 would then push SNMX into new 52-week territory, which is bullish technical price action. Some possible upside targets off that move are $3.10 to $3.89 a share.

Document Security Systems

One under-$10 name that’s trending within range of triggering a near-term breakout trade is Document Security Systems (DSS), which is engaged in fraud and counterfeit protection for all forms of printed documents and digital information. It holds numerous patents for optical deterrent technologies that provide protection of printed information. This stock has been off to a decent start in 2013, with shares up 13.3%.

If you take a look at the chart for Document Security Systems, you’ll notice that this stock has recently started to spike back above its 50-day moving average of $2.29 a share with heavy upside volume. That move is quickly pushing shares of DSS within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in DSS if it manages to break out above some near-term overhead resistance levels at $2.59 to $2.60 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 48,098 shares. If that breakout triggers soon, then DSS this stock will set up to re-test or possibly take out its next major overhead resistance levels at $2.90 to its 200-day moving average at $3.06 a share. Any high-volume move above $3.06 will then put 3.22 to $3.60 into range for shares of DSS.

JA Solar

Another under-$10 name that’s quickly moving within range of triggering a near-term breakout trade is JA Solar (JASO), which designs, manufactures and markets high-performance solar cells, which are made from specially processed silicon wafers. This stock hasn’t done much so far in 2013, with shares up just 4.8%.

If you take a look at the chart for JA Solar, you’ll notice that this stock recently came out of a nasty downtrend from $6.14 to $3.37 a share. Shares of JASO have started to spike sharply higher with heavy upside volume after hitting that low of $3.37 a share and are now quickly moving within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in JASO as long as it’s trending above its 200-day at $4.50 a share and then once it breaks out above its 50-day at $4.66 a share and then above more resistance at $4.89 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 494,818 shares. If that breakout triggers, then JASO will set up to re-test or possibly take out its next major overhead resistance levels at $5.75 to $6.14 a share.

TransGlobe Energy

One more under-$10 stock that’s trending very close to triggering a near-term breakout trade is TransGlobe Energy (TGA), which is engaged in the exploration for and the development and production of oil and gas in Egypt and Yemen. This stock has been hit hard by the sellers during the last six months, with shares off by 27%.

If you take a look at the chart for TransGlobe Energy, you’ll see that this stock recently formed a double bottom at around $7.37 to $7.40 a share. The stock has started to bounce off that support area and it’s now quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in TGA if it manages to break out above its 50-day moving average of $8.41 a share with high volume. Look for a sustained move or close above $8.41 a share with volume that hits near or above its three-month average action of 98,180 shares. If that breakout triggers soon, then TGA will set up to re-test or possibly take out its next major overhead resistance levels at $9.32 to its 200-day moving average at $9.68 a share. Any high-volume move above those levels will then put $10.50 to $11 into range for shares of TGA.

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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>>4 Biotech Stocsk Under $10 Making Big Moves

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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.