Stock Quotes in this Article: CIMT, PLX, PPHM, SQNM, ZQK

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 Microvision (MVIS), which skyrocketed by 58.1%; Novogen (NVGN), which ripped higher by 40%; NII Holdings (NIHD), which soared by 21.3%; and Zynga (ZNGA), which trended up 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.

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One low-priced stock I recently flagged that’s skyrocketing higher today is molecular diagnostics player CombiMatrix (CBMX), which I highlighted in March 28's “5 Stocks Under $10 Set to Soar” at around $3.20 a share. I mentioned in that piece that shares of CBMX had recently formed a triple-bottom chart pattern at $2.80 to $2.97 a share. The stock was starting to rebound off those major support levels, and it was quickly moving within range of triggering a major breakout trade above $3.73 to $3.78 a share.

Guess what happened? Shares of CBMX triggered that breakout twice since I wrote the article. The first time the stock popped up by 20% to $4.10 on April 1 and then quickly sold off back down to $3.32 a share. The second time has triggered today, and shares of CBMX skyrocketed higher by over 30% to hit its intraday high of $4.62 a share. Both moves produced ridiculous gians for anyone playing CBMX from the time I highlighted the breakout.

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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.

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

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Peregrine Pharmaceuticals

One under-$10 stock that’s trending very close to trigger a major breakout trade is Peregrine Pharmaceuticals (PPHM), which is developing first-in-class monoclonal antibodies for the treatment and diagnosis of cancer. This stock has been uptrending modestly so far in 2013, with shares up 8.3%.

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If you take a look at the chart for Peregrine Pharmaceuticals, you’ll notice that this stock has recently put in a triple bottom chart pattern at $1.20, $1.29 and $1.27 a share. This stock is now starting to bounce off those support levels, and it’s quickly moving within range of triggering a major breakout trade. If that triple bottom can hold, then shares of PPHM could be setting up for a monster move higher.

Traders should now look for long-biased trades in PPHM if it manages to break out above its 200-day moving average at $1.58 and its 50-day moving average at $1.62 a share and then above some more resistance at $1.68 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 5.12 million shares. If that breakout triggers soon, then PPHM will set up to re-test or possibly take out its next major overhead resistance levels at $2.40 to $2.78 a share. Any high-volume move above $2.78 would then put a huge gap down zone from last September into play that started at $5.50 a share.

Traders can look to buy PPHM off any weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $1.27 to $1.20 a share. One can also buy PPHM off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $1.40 a share. I would add to either position once PPHM takes out $1.68 a share with heavy volume.

The shorts are pretty involved in this stock, since its current short interest as a percentage of the float for PPHM is 9.7%. If that breakout triggers soon, then PPHM could get squeezed higher as the bears rush to cover some of their short bets.

Sequenom

Another under-$10 stock that’s starting to trend within range of triggering a near-term breakout trade is Sequenom (SQNM), which is a molecular diagnostic testing and genetics analysis company which provides molecular diagnostic testing services. This stock is off to a rough start in 2013, with shares off by 13.8%.

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If you take a look at the chart for Sequenom, you’ll notice that this stock has been trending sideways for the last three months, with shares moving between $3.80 on the downside and $4.70 on the upside. Shares of SQNM are starting to bounce off its 200-day moving average of $4.01 today and are quickly moving within range of triggering a breakout trade above the upper-end of its recent sideways chart pattern.

Market players should now look for long-biased trades in SQNM if it manages to take out its 50-day moving average of $4.31 a share and then once it breaks out above more overhead resistance levels at $4.69 to $4.70 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 3.56 million shares. If that breakout hits soon, then SQNM will set up to re-test or possibly take out its next major overhead resistance levels at $5.36 to $6 a share.

Traders can look to buy SQNM off any weakness to anticipate that breakout and simply use a stop that sits right around $3.80 a share. One can also buy SQNM off strength once it takes out those breakout levels with volume and then simply use a stop that sits right below its 200-day at $4.01 a share.

This stock is a favorite target of the short-sellers, since the current short interest as a percentage of the float for SQNM is very high at 33.1%. If that breakout triggers soon, then we could easily get a monster short-squeeze for SQNM, so make sure to keep this name on your breakout trading radar.

Cimatron

One under-$10 name that’s just starting to trigger a major breakout trade today is Cimatron (CIMT), which develops and distributes CAD/CAM software for the manufacturing industry. The company offers solutions for mold and die makers, as well as Axis production milling and turning. This stock is off to a hot start in 2013, with shares up a whopping 45%.

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If you take a look at the chart for Cimatron, you’ll notice that this stock is bouncing strongly today right off some near-term support at $5.92 a share, and it’s starting to rip sharply higher and break out above some near-term overhead resistance at $6.60 a share. If this breakout holds, then shares of CIMT could easily explode much higher from current levels.

Traders should now look for long-biased trades in CIMT if it manages to break out above some near-term overhead resistance at $6.60 a share and then once it clears its 50-day moving average of $7.80 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 492,887 shares. If that breakout triggers soon, then CIMT will set up to re-test or possibly take out its next major overhead resistance level at $8.95 a share. Any high-volume move above $8.95 will then put $11 to $12.88 into range for shares of CIMT.

Traders can look to buy CIMT off any weakness to anticipate that breakout and simply use a stop that sits right below $5.92 a share. One could also buy CIMT off strength once it clears those breakout levels with volume and simply use a stop that’s a few percentage points below your entry point. I would add to either position if CIMT clears $8.95 a share with heavy upside volume.

This stock has explosive potential because the tradable float is low at 2.43 million shares and the short interest as a percentage of the float is high for CIMT at 10.7%. Make sure to have this name on your breakout trading radar.

Protalix BioTherapeutics

Another under-$10 name that’s starting to trend within range of triggering a major breakout trade is Protalix BioTherapeutics (PLX), which is engaged in the development and commercialization of recombinant therapeutic proteins based on its proprietary ProCellEx protein expression system. This stock is off to a decent start in 2013, with shares up 8.2%.

If you take a look at the chart for Protalix BioTherapeutics, you’ll notice that this stock is just starting to bounce off its 200-day moving average of $5.44 a share, and it’s just starting to flirt with its 50-day moving average of $5.61 a share. This move is quickly pushing PLX above a near-term downtrend line and it’s moving the stock within range of triggering a major breakout trade.

Market players should now look for long-biased trades in PLX if it manages to break out above some near-term overhead resistance levels at $5.74 to $5.98 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 341,921 shares. If that breakout triggers soon, then PLX will set up to re-test or possibly take out its next major overhead resistance level at $6.73 a share. Any high-volume move above $6.73 to $6.80 will then put $7.70 into range for shares of PLX.

Traders can look to buy PLX off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $5.44 a share or near some key near-term support at $5.40 a share. One could also buy PLX off strength once it takes out those breakout levels with volume and then simply use a stop right below its 50-day at $5.62 or its 200-day at $5.44 a share.

Quiksilver

One more under-$10 name that’s starting to move within range of triggering a near-term breakout trade is Quiksilver (ZQK), which designs, develops and distributes branded apparel, footwear, accessories and related products, catering to the casual, youth lifestyle associated with the sports of surfing, skateboarding and snowboarding. This stock has been on fire during the last six months, with shares up an impressive 80%.

If you take a look at the chart for Quiksilver, you’ll notice that this stock has been trending sideways for the last month and change, with shares moving between $5.65 on the downside and $6.73 on the upside. Shares of ZQK are starting to bounce off the lower-end of that range and it’s quickly moving towards its 50-day moving average of $5.31 a share. If this stock can manage to take out its 50-day, then it will set up to potentially break out above the upper-end of its recent sideways chart pattern.

Traders should now look for long-biased trades in ZQK if it manages to take out its 50-day at $6.31 a share and then once it breaks out above some near-term overhead resistance levels at $6.73 to $6.83 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 2.89 million shares. If that breakout triggers soon, then ZQK will set up to enter new 52-week-high territory above $6.83 a share, which is bullish technical price action. Some possible upside targets off that breakout are $8 to $10 a share.

Traders can look to buy ZQK off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $5.86 to $5.65 a share. One could also buy ZQK off strength once it clears those breakout levels with volume and then simply use a stop that sits right below its 50-day at $6.31 a share or near $5.86 a share.

This is another stock that the bears seem to love, since the current short interest as a percentage of the float for ZQK is pretty high at 11.2%. If ZQK breaks out soon to a new 52-week high, then I think we could easily see a sizeable short-squeeze get underway.

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.