Stock Quotes in this Article: EGHT, MOTR, ZIOP, MDGN, BSMP

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street when 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 Kips Bay Medical (KIPS), which soared by 26.2%; China Hydroelectric (CHC), which ripped higher by 17%; Amyris (AMRS), which trended up by 16.3%; and RF Micro Devices (RFMD), which spiked higher by 10.9%. 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 recently exploded to the upside was Supervalu (SVU), which I highlighted in Oct. 18's “5 Stocks Under $10 Set to Soar” at around $2.10 a share. I mentioned that SVU had rebounded off its recent low of $1.80 a share with decent volume and was starting to approach its 50-day moving average at $2.28 a share. That rebound was also pushing SVU within range of triggering a near-term breakout trade above $2.28 to $2.62 a share.

Guess what happened? Just two days later, shares of SVU exploded above $2.28 to $2.62 a share with monster upside volume. The stock went on to hit a high of $3.17, which is one point higher from where I wrote the article. That’s a massive gain in just a few days. Shares of SVU still look bullish, and the stock could be setting up for another major breakout if it can manage to take out $3 to $3.17 a share with volume soon. Any high-volume move then above $3.50 would give SVU a chance to re-fill some of its previous gap done zone from July that started near $5.30 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 for 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.

Motricity

One under-$10 stock in the computer services complex that’s trading very close to triggering a near-term breakout trade is Motricity (MOTR), a provider of mobile data solutions serving mobile operators, consumer brands and enterprises, and advertising agencies.This stock has been crushed by the bears so far in 2012, with shares down by over 50%.

If you take a look at the chart for Motricity, you’ll notice that this stock recently ripped back above its 50-day moving average of 49 per cents with above-average volume. Shares of MOTR have also started to move above some near-term overhead resistance levels at 52 to 54 per cents with above-average volume. That action is now pushing MOTR within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in MOTR once it manages to break out above some near-term overhead resistance at 60 cents to 66 cents per 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 376,478 shares. If that breakout triggers soon, then MOTR will setup to re-test or possibly take out its next major overhead resistance levels at 79 cents to 90 cents per share. Any high-volume move above 90 cents could send MOTR to $1.10 to $1.20 a share or higher.

Traders can look to buy MOTR off weakness long as its trending above its 50-day at 49 cents per share with strong upside volume flows. Or you can buy off strength once it clears 60 cents to 66 cents per share with volume, and then simply use a stop right below 54 cents to 52 cents.

As of the most recently reported quarter, Motricity was one of Carl Icahn's holdings.

Medgenics

Another under-$10 stock that’s setting up to trigger a near-term breakout trade is Medgenics (MDGN), a medical technology and therapeutics company focused on providing sustained protein therapies. This stock has been on fire so far in 2012, with shares up a whopping 275%.

If you take a look at the chart for Medgenics, you’ll see that this stock has been downtrending for the last four months, with shares falling from a high of $16.43 to a recent low of $8.25 a share. During that downtrend, shares of MDGN have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of MDGN have recently started to bounce off its 200-day and are now pushing within range of triggering a near-term breakout trade.

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Market players should now look for long-biased trades in MDGN once it manages to trigger a break out above some near-term overhead resistance levels at $9.75 to $11 a share, and then above $11.45 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 65,140 shares. If that breakout triggers soon, then MDGN will setup to re-test or possibly take out its next major overhead resistance level at $13.50 a share. Keep in mind that any move above $10.63 will also push MDGN back above its 50-day moving average.

Traders can look to buy MDGN off any weakness as long as it’s trending above its 50-day at $9.75 to $11 a share with strong upside volume flows. You could also buy off strength once MDGN takes out $11 to $11.45 a share with high volume, and then simply use a stop just below its 50-day at $10.63 a share.

Biostar Pharmaceuticals

In the biotech complex, another under-$10 stock that looks ready to enter breakout territory is Biostar Pharmaceuticals (BSPM), a holding company that develops, manufactures and markets pharmaceutical products for a variety of diseases and conditions in the People's Republic of China. This stock has been smacked down by the sellers so far in 2012, with shares off by over 25%.

If you take a look at the chart for Biostar Pharmaceuticals, you’ll notice that for the last three months, this stock has been trending sideways between $1.53 on the upside and $1.10 on the downside. Shares of BSPM have just started to bounce strongly right off its 50-day at $1.25 a share with above-average volume. That move is quickly pushing BSPM within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in BSPM once it manages to break out above some near-term overhead resistance levels at $1.42 to $1.46 a share, and then above $1.53 to $1.55 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 23,882 shares. If that breakout triggers soon, then BSPM will set up to re-test or possibly take out its next major overhead resistance level at its 200-day moving average of $1.65. Any high-volume move above $1.65 will set up BSPM to tag $1.85 or possible north of its June high of $2 a share.

Traders can look to buy BSPM as long as it’s trending above its 50-day moving average at $1.25 a share with strong upside volume flows. You can also buy off strength once BSPM takes out $1.42 to $1.55 with volume and then add to either position above $1.65 a share. I would stop out of either trade below the 50-day at $1.25 a share.

Ziopharm Oncology

Another under-$10 name that’s trading very close to triggering a near-term breakout trade is Ziopharm Oncology (ZIOP), a biopharmaceutical company engaged in the development and commercialization of small molecule and synthetic biology approaches to new cancer therapies. This stock is off to a decent start in 2012, with shares up around 16% on the year.

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If you take a look at the chart for Ziopharm Oncology, you’ll notice that this stock recently dropped sharply from around $4.75 to a low of $3.36 a share with heavy volume. Following that plunge, shares of ZIOP have rebounded sharply to its current price of around $5.10 a share. That rebound is quickly pushing ZIOP within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in ZIOP if it can manage to trigger a break out above some near-term overhead resistance levels at $5.31 to $5.75 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 639,378 shares. If that breakout triggers soon, then ZIOP will setup to re-test or possibly take out its next major overhead resistance levels at $6.02 to $6.33 a share. Any high-volume move above $6.33 will put $7 to $7.85 into focus for ZIOP.

Traders can look to buy ZIOP off any weakness, and simply use a stop that sits just below some near-term support at $5 a share. One could also buy ZIOP once it clears its 50-day at $5.20 with high volume. Look to add to either position once ZIOP takes out $5.31 to $5.75 a share, and then once it clears $6.02 to $6.33 a share with high volume.

8x8

One more under-$10 stock that’s trading within range of triggering a major breakout trade is 8x8 (EGHT), which offers voice, video, mobile and unified communications solutions for business of all sizes. This stock has been on fire so far in 2012, with shares up by over 110%.

If you take a look at the chart for 8x8, you’ll notice that this stock has been uptrending very strong for the last six months, with shares soaring from a low of $3.80 to its recent high of $7.02 a share. During that uptrend, shares of EGHT have been making higher lows and high highs, which is bullish technical price action. The stock recently pulled back off $7.02 to a low of $5.62 a share, but it’s started to rebound back above its 50-day and move within range of triggering a major breakout trade.

Traders should now look for long-biased trades in EGHT once it manages to break out above some near-term overhead resistance at $6.55 to $7.02 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 850,540 shares. If that breakout triggers soon, then EGHT will have a great chance of hitting $8 to $10 a share or possible even higher.

One could look to buy EGHT off weakness to anticipate that breakout, and simply use a stop that sits right around its 50-day at $6.21 a share. One could also buy off strength once EGHT clears $6.55 to $7.02 a share with high volume and then simply use the same stop at around $6.21 a share.

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 Stocks Ready for a Dividend Boost in 2012
>>5 Fast-Growing Mid-Caps for a Rebounding Economy

>>5 Stocks With Big Insider Buying

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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.