Stock Quotes in this Article: CYTX, FOLD, MEMS, XRS, ADNC

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 Cleantech Solutions (CLNT), which soared by 17.3%; Keegan Resources (KGN), which ripped to the upside by 16%; PURE Bioscience (PURE), which trended up by 15.6%; and Inovio Pharmaceuticals (INO), which exploded to the upside by 14.9%. 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 to Trade This Earnings Season

One low-priced stock that I recently highlighted that went on to skyrocket is Otelco (OTT), which I highlighted in Oct. 5's “4 Stocks Under $10 Making Big Moves” at around $2 a share. I mentioned that OTT was ripping off support at $1.75 a share and was quickly moving into range of triggering a major breakout. That breakout was set to trigger once OTT took out some near-term overhead resistance at $2.14 with high volume.

Guess what happened? Shares of OTT exploded higher above $2.14 a share the next day with monster upside volume. Since then, strong upside volume has continued to flow into the stock as it recently hit a high of $3.19 a share. That’s a monster gain in just a few days, and all anyone had to do was buy after they saw the price action and volume conformation. Traders should now look to get long OTT once it takes out $3.19 with above-average volume. This stock could still have more upside if that level gets taken out soon.

>>5 Blue-Chip Stocks to Buy to Beat the S&P

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.

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.

Amicus Therapeutics

An under-$10 stock in the biotechnology and drugs complex that’s trading very close to triggering a near-term breakout trade is Amicus Therapeutics (FOLD), which is focused on the discovery, development and commercialization of a new class of orally administered, small molecule drugs, for the treatment of a range of human genetic diseases. This stock has been on fire so far in 2012, with shares up a whopping 75%.

>>5 Stocks Poised to Pop on Bullish Earnings

If you take a look at the chart for Amicus Therapeutics, you’ll notice that for the last two months, this stock has been uptrending from a low of $4.50 to its recent high of $6.15 a share. During that uptrend, shares of FOLD have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed FOLD within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in FOLD once it manages to break out above some near-term overhead resistance at $6.15 with high volume. Look for a sustained move or close above $6.15 with volume that hits near or above its three-month average action of 838,068 shares. If that breakout triggers soon, then FOLD will setup to re-test or possibly take out its next significant overhead resistance levels at $6.89 to $7.29 a share. If those levels get taken out with volume, then FOLD could easily trade north of $8 a share in the near future.

Traders can look to buy FOLD off any weakness, and simply use a stop somewhere below its 200-day moving average of $5.31 a share. A better strategy might be to buy off strength once FOLD clears $6.15 a share with volume, and then use a stop just below $5.60 a share. I would look to add to either position once FOLD takes out $6.89 to $7.29 a share with heavy volume.

TAL Education Group

Another under-$10 stock that’s setting up to trigger a near-term breakout trade is TAL Education Group (XRS), a holding company for a group of companies engaged in the provision of after-school tutoring programs for primary and secondary school students in the People’s Republic of China. This stock is off to a slow start so far in 2012, with shares down by around 12%.

>>5 Rocket Stocks to Buy in October

If you take a look at the chart for TAL Education Group, you’ll see that this stock has been uptrending rather strong for the last month and change, with shares rising from a low of $6.97 to its recent high of $8.72 a share. During that uptrend, shares of XRS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed XRS within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in XRS as long as it’s trending above its 50-day at $8.72, and then once it manages to trigger a break out above some near-term overhead resistance levels at $9.03 to $9.16 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 of 86,415 shares. If that breakout triggers soon, then XRS will setup to re-test and possibly take out its next major overhead resistance levels at $10.04 to $10.31, and at $11 to $11.37 a share.

Traders can look to buy XRS off any weakness as long as it maintains its trend above its 50-day at $8.21 a share. You could also buy off strength once XRS clears those breakout levels with volume, and simply use a stop just below some near-term support at $8.65 to $8.50 a share.

Memsic

Another under-$10 stock that looks ready to trigger a major breakout trade is Memsic (MEMS), which provides advanced semiconductor sensor and system solutions based on integrated micro electro-mechanical systems, technology and mixed signal circuit design. This stock has been hit hard by the sellers so far in 2012, with shares down by over 30%.

>>5 Toxic Tech Stocks to Sell Now

If you take a look at the chart for Memsic, you’ll notice that this stock has been downtrending badly for the last three months, with shares dropping from a high of $2.65 to a recent low of $1.48 a share. During that sharp move lower, shares of MEMS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of MEMS have now started to uptrend and reverse that bearish downtrend during the last few weeks. That move is quickly pushing MEMS within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in MEMS once it manages to break out above some near-term overhead resistance levels at $1.78 to $1.82 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 162,109 shares. If that breakout triggers soon, then MEMS could explode to the upside and re-test or possibly take out its next major resistance levels at $2.31 to $2.65 a share. Any high-volume move above those levels will setup MEMS to potentially take out its 200-day at $2.78 and trend up towards $3.50 a share.

Traders can look to buy MEMS as long as it’s trending above its 50-day moving average of $1.76 with strong upside volume flows. I would add to any long positions once MEMS takes out $2.31 to $2.78 a share with high volume.

Cytori Therapeutics

Another under-$10 stock that’s trading very close to triggering a near-term breakout trade is medical equipment and supplies player Cytori Therapeutics (CYTX), which develops, manufactures, and sells medical products and devices to enable the practice of regenerative medicine. This stock has been on fire in a big way so far in 2012, with shares up a whopping 94%.

If you take a look at the chart for Cytori Therapeutics, you’ll see that this stock has been in a monster uptrend for the last six months, with shares skyrocketing from a low of $2.01 to its recent high of $4.93 a share. During that uptrend, shares of CYTX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed CYTX within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in CYTX if it can manage to trigger a break out above some near-term overhead resistance levels at $4.47 to $4.93 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 409,383 shares. If that breakout triggers soon, then look for CYTX to re-test or possibly take out its next major overhead resistance levels at $5.72 to $7.50 a share.

Traders can look to get long CYTX off any weakness, and simply use a stop that sits right below some near-term support levels at $3.85 to $3.61 a share. One could also buy CYTX off strength once it clears those breakout levels with volume, and then simply use a stop just below $4.50 a share.

Audience

One more under-$10 stock in the semiconductor complex that’s trading within range of triggering a major breakout trade is Audience (ADNC), a provider of voice and audio solutions that improve voice quality and the user experience in mobile devices. This stock has been destroyed by the sellers so far in 2012, with shares down by an eye-popping 69%.

If you take a look at the chart for Audience, you’ll notice that this stock recently gapped down big from over $18 to a low of $5.80 a share with monster volume. That plunge happened in early September, and since then the stock has gone on to spike up briefly to $7.20 and then drop again and hit a new low of $5.51 a share. That action has pushed ADNC into extremely oversold territory, since its current relative strength index reading is now 19.32. Oversold can always get more oversold, but ADNC is starting show some life as it pushes into range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ADNC once it manages to break out above some near-term overhead resistance levels at $5.84 to $6, and then above $7.20 to $7.36 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 320,895 shares. If that breakout triggers soon, then look for ADNC to re-fill some of that previous gap and possibly hit its 50-day moving average of $12.08 a share.

One could look to buy ADNC off weakness to anticipate that breakout, and simply use a stop that sits right around that recent low of $5.51 a share. One could also buy off strength once ADNC clears $5.84 to $6 a share with high volume, and then simply use a stop right below $5.51 share. I would add to either position once ADNC takes out $7.20 to $7.36 with heavy volume, and then look the stock to quickly get into that gap.

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:

>>5 Dividend Stocks Ready to Pay You More
>>Buffett's “Secret” Reveals 5 Stocks to Buy

>>5 Stocks Insiders Love Right Now

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.