Stock Quotes in this Article: ATEC, MWW, NSPH, PSTI, NCQ

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street where 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 Vringo (VRNG), which skyrocketed higher by over 30%; Biolase (BIOL), which spiked higher by over 30%; and Hydrogenics (HYGS), which ripped to the upside by 10%. 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 has demonstrated a lot of strength lately is Zogenix (ZGNX), which I highlighted in Sept. 14's “5 Stocks Poised for Breakouts” at around $2.40 a share. I mentioned that ZGNX had been uptrending very strong, and the stock was quickly moving within range of triggering a major breakout trade. That trade would hit once ZGNX managed to clear some near-term overhead resistance at $2.54 to $2.60 a share with high volume.

Guess what happened? Shares of ZGNX went on to trigger that breakout with massive upside volume just a few days later. This stock is now printing new 52-week highs as I write this with shares trading at $3.23. That move has pushed ZGNX above some more resistance at $2.90 to $3.04 a share. If this stock can continue to trend above $2.90 to $3.04 a share with strong upside volume, then it has a great chance of tagging $4 to $5 a share in the very near future.

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.

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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.

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

 

Pluristem Therapeutics

One under-$10 stock that’s trading very close to triggering a near-term breakout trade is Pluristem Therapeutics (PSTI), a bio-therapeutics company engaged in the commercialization of non-personalized cell therapy products for the treatment of several severe degenerative, ischemic and autoimmune disorders. This stock has been on fire so far in 2012, with shares up a whopping 60%.

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If you take a look at the chart for Pluristem Therapeutics, you’ll notice that this stock recently formed a double top at around $5 to $4.90 a share, after soaring from a low of $2.26 a share. Following that double top, shares of PSTI abruptly pulled back to its recent low of $3.65 a share. During that pullback, shares of PSTI were making lower highs and lower lows, which is bearish technical price action. That said, the stock has now started to rebound back above its 50-day moving average of $4 a share. That move is quickly pushing PSTI within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in PSTI as long as it’s trending above its 50-day at $4, and then once it breaks out above some near-term overhead resistance at $4.28 a share with high volume. Look for a sustained move or close above $4.28 with volume that hits near or above its three-month average action of 1.4 million shares. If that breakout triggers soon, then PSTI will setup to re-test or possibly take out those double top price levels at $4.90 to $5 a share. Any high-volume move above $5 a share should setup PSTI to trend north of $6 a share.

Traders can now look to buy PSTI off weakness and simply use a stop somewhere below its 50-day moving average of $4 a share, or possibly around that recent low of $3.65 a share. A better strategy might be to buy off strength once PSTI takes out $4.28 a share with volume and then use a stop right around its 50-day.

Nanosphere

Another under-$10 stock in the biotechnology and drugs complex that’s setting up to trigger a major breakout trade is Nanosphere (NSPH), which is engaged in developing, manufacturing and marketing of molecular diagnostics platform, the Verigene System, which enables sensitive genomic and protein testing on a single platform, including both genomic and protein assays, from a single sample. This stock has been soaring so far in 2012, with shares up a whopping 144%.

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If you take a look at the chart for Nanosphere, you’ll see that this stock has been uptrending extremely strong for the last six months, with shares soaring from a low of $1.51 to its recent high of $3.89 a share. During that monster uptrend, shares of NSPH have consistently made higher lows and higher highs, which is bullish technical price action. This stock just recently spiked big right off its 50-day moving average of $3.28 a share. That spike is has now pushed NSPH within range of triggering a major breakout trade.

Market players should now look for long-biased trades in NSPH as long as it’s trending above its 50-day, and then once it manages to trigger a break out above some near-term overhead resistance levels at $3.64 to $3.89 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 1,185,590 shares. If NSPH can trigger that breakout soon, then look for this stock to tag its next significant overhead resistance levels at $4.50 to $5.50 a share.

Traders can now look to buy NSPH off any weakness as long as it’s trending above its 50-day at $3.28 a share, and simply anticipate that breakout. You could also buy off strength once NSPH clears those breakout levels with volume, and simply use a stop at around $3.50 a share.

NovaCopper

Another under-$10 stock that looks poised for higher prices is NovaCopper (NCQ), which engages in the exploration and development of base metals in the U.S. This stock has been hit hard by the bears so far in 2012, with shares down by over 35%.

If you take a look at the chart for NovaCopper, you’ll notice that this stock recently pulled back off its highs of $2.92 to $2.75 a share to its recent low of $2.03 a share. That pullback has held a pattern of higher lows for NCQ as the stock is starting to find buying interest around its 50-day moving average of $2.17 a share. If NCQ can hold its 50-day and start to get some heavy upside volume flows, then it could easily setup to re-test its recent highs and trigger a major breakout trade.

Traders should now look for long-biased trades in NCQ as long as its trending above its 50-day at $2.17, and then once it breaks out above some overhead resistance levels at $2.75 to $2.92 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 228,136 shares. If that breakout triggers soon, then NCQ will have a great chance to re-test or possibly take out its next major overhead resistance levels at $3.45 to $4 a share.

Traders can look to buy NCQ off weakness with a stop that sits just below its 50-day at $2.17, or just below its recent low of $2.03 a share. I would look to add to this position once NCQ clears those breakout levels with heavy volume.

Monster Worldwide

Another under-$10 name that’s trading very close to triggering a near-term breakout trade is Monster Worldwide (MWW), which provides global online employment solutions, with a presence in approximately 55 countries around the world. This stock has literally done nothing so far in 2012, with shares virtually flat.

If you take a look at the chart for Monster Worldwide, you’ll see that this stock has been uptrending very strong for the last two months, with shares spiking higher from a low of $5.71 to $9.05 a share. During that uptrend, shares of MWW have been mostly making higher lows and higher highs, which is bullish technical price action. Shares of MWW have now pulled back off its recent highs, and it’s started to bounce off its 50-day at $7.32 a share. That move is now pushing MWW within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in MWW if it can manage to trigger a break out above some near-term overhead resistance levels at $7.89 to $8.03 a share with high volume. Look for a sustained move or close above those levels with volume that hits close to or above its three-month average action of 3.45 million shares. If that breakout triggers soon, then MWW will setup to re-test or possibly take out its next major overhead resistance levels at $9.04 to $9.14 a share, or possibly even $9.63 to $10.40 a share.

Traders can look to get long MWW off weakness, and simply use a stop that sits right below its 50-day at $7.32, or even near some previous support at $7.05 a share. One could also buy MWW off strength once it clears $7.89 to $8.03 a share with volume, and then simply use a stop right below its 50-day.

Alphatec

One more under-$10 stock that’s trading within range of triggering a major breakout trade is Alphatec (ATEC), a medical technology company focused on the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders, with a focus on products that treat conditions that affect the aging spine. This stock is off to a slow start so far in 2012, with shares up just 6.5%.

If you take a look at the chart for Alphatec, you’ll notice that this stock has been trending sideways for the last three months, with shares moving between $1.50 on the downside and $1.90 on the upside. Shares of ATECH have recently started to bounce strongly off its 50-day at $1.68 with heavy volume, and it’s also starting to flirt with its 200-day at $1.86 a share. That move is quickly pushing ATEC within range of breaking out topside of its sideways trading pattern.

Traders should now look for long-biased trades in ATEC once it manages to break out above some past overhead resistance at $1.90 a share with high volume. Look for a sustained move or close above $1.90 with volume that registers near or above its three-month average action of 132,369 shares. If that breakout triggers soon, then ATEC will setup to re-test or possibly take out its next major overhead resistance levels at $2.20 to $2.40 a share, or possibly even $2.80 to $3.50 a share.

One could look to buy ATEC off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day around some near-term support at $1.68 a share. One could also buy off strength once ATEC clears $1.90 with high volume and then simply use a stop at around $1.75 a share. Keep in mind that any move above $1.86 will push ATEC back above its 200-day moving average, which is technically bullish price action.

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.