Stock Quotes in this Article: ACUR, MM, POZN, RAD, BLRX

 MADISON, Wis. (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 OCZ Technology (OCZ), which skyrocketed higher by 26%; Park City Group (PCYG), which soared by 21.8%; Recovery Energy (RECV), which surged by 18.6%; and Ecotality (ECTY), which ripped to the upside by 14.6%. 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 recently skyrocketed higher was biotechnology and drugs player Acura Pharmaceuticals (ACUR), which I highlighted in April 5's “5 Stocks Poised for Breakouts” at around $2.20 a share. I mentioned in that piece that shares of ACUR had recently formed a double bottom chart pattern at $1.95 to $2 a share. The stock was just starting to trend back above a key downtrend line that had been acting as resistance for over the last month. That move was quickly pushing shares of ACUR within range of triggering a major breakout trade that could send shares soaring higher.

Guess what happened? Shares of ACUR triggered that breakout on April 17 with heavy upside volume. The stock exploded to the upside and tagged an intraday high of $3.78 a share, which represented a monster gain of over 60%. If you had bought the stock on weakness or strength to anticipate that breakout, then you banked some serious coin on a day when the overall market was getting hammered. The best part about this move is that ACUR never violated its double bottom area at $2 to $1.95 a share, prior to the explosive 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.

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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.

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Bioline Rx

One under-$10 stock that’s trending very close to trigger a big breakout is Bioline Rx (BLRX), a clinical-stage biopharmaceutical development company engaged in identifying, in-licensing and developing therapeutic compounds in areas of central nervous system, oncology, cardiovascular and infectious diseases. This stock has been hammered by the bears so far in 2013, with shares off by 28%.

If you take a look at the chart for Bioline Rx, you’ll notice that this stock recently gapped down sharply from over $3.75 to $1.60 a share with heavy downside volume. Following that move, shares of BLRX have started to reverse its bearish price trend and rebound higher, with the stock hitting a recent high of $2.16 a share. That move is quickly pushing shares of BLRX within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in BLRX if it manages to break out above some near-term overhead resistance levels at $2 to $2.16 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 284,000 shares. If that breakout triggers soon, then BLRX will set up to re-fill some of its previous gap down zone from March that started above $3.75 a share.

Traders can look to buy BLRX off weakness to anticipate that breakout and simply use a stop that sits just below $1.75 a share. One can also buy off strength once BLRX takes out those breakout levels with volume and then simply use a stop a few percentage points below your entry point.

Millennial Media

Another under-$10 stock that’s starting to trade within range of triggering a near-term breakout trade is Millennial Media (MM), which is an independent mobile advertising platform company. This stock has been crushed by the bears so far in 2013, with shares off by a whopping 50%.

If you take a look at the chart for Millennial Media, you’ll notice that this stock has recently started to trend sideways in a consolidation pattern between $5.87 a share on the downside and $6.71 a share on the upside. This sideways chart pattern is coming after shares of MM downtrended badly from $10 to $5.87 a share. Shares of MM are now starting to move within range of triggering a near-term breakout trade.

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Market players should now look for long-biased trades in MM if it manages to break out above some near-term overhead resistance levels at $6.71 to $6.92 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 1.72 million shares. If that breakout hits soon, then MM will set up to re-test or possibly take out its next major overhead resistance levels at $7.37 to its 50-day moving average at $8.37 a share. Any high-volume move above its 50-day will then put $8.80 to $9.50 into range for shares of MM.

Traders can look to buy MM off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $6.01 to $5.87 a share. Once can also buy off strength once MM takes out those breakout levels with volume and then use a stop that’s a few percentage points below your entry point.

Rite Aid

Another under-$10 stock that’s trending within range of triggering a near-term breakout trade is Rite Aid (RAD), which operates a retail drugstore chain in the U.S. This stock has been on fire so far in 2013, with shares up sharply by 70%.

If you take a look at the chart for Rite Aid, you’ll notice that this stock recently gapped up sharply from $1.80 to over $2.10 a share with heavy upside volume. Following that gap up, shares of RAD have continued to spike higher with monster upside volume. That move is quickly pushing shares of RAD within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in RAD if it manages to break out above some near-term overhead resistance at $2.44 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 13.97 million shares. If that breakout triggers soon, then RAD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $3 to $3.50 a share, or possibly even $4 a share.

Traders can look to buy RAD off weakness to anticipate that breakout and simply use a stop that sits a bit below some key near-term support at $2.16 a share. One can also buy RAD off strength once it clears $2.44 with volume and then simply use a stop just below $2.30 to $2.25 a share.

Rediff.com

Another under-$10 name that’s quickly moving within range of triggering a near-term breakout trade is Rediff.com (REDF), which is engaged in the business of providing online internet based services, focusing on India and the global Indian community. This stock has been pressured by the sellers during the last six months, with shares off by 33%.

If you take a look at the chart for Rediff.com, you’ll notice that this stock has started to form a bottoming pattern during the last two months between $2.58, $2.63 and $2.68 a share. Shares of REDF are starting to spike off those support levels and it’s quickly moving within range of triggering a big breakout trade above a key downtrend line. That downtrend line has acted as resistance for REDF for about three months.

Market players should now look for long-biased trades in REDF as long as it’s trending above those $2.63 to $2.58, and then once it breaks out above its 50-day at $2.81 a share and then above more overhead resistance levels at $3.01 to its 200-day at $3.08 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 69,000 shares. If that breakout triggers, then REDF will set up to re-test or possibly take out its next major overhead resistance levels at $3.19 to $3.39 a share. Any high-volume move above $3.39 will then put $3.82 to $4.45 into range for shares of REDF.

Pozen

One more under-$10 name that’s trending very close to triggering a major breakout trade is Pozen (POZN), which is a pharmaceutical development company that focuses on migraine treatment through the use of triptans and different delivery mechanisms. This stock has been downtrending over the last six months, with shares off by 24%.

If you take a look at the chart for POZN, you’ll see that this stock has dropped sharply from its March high of $6.49 a share to its recent low of $4.55 a share. During that selloff, shares of POZN were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of POZN have started to rebound off that $4.55 low with the stock hitting a recent high of $5.15 a share. That move is coming with expanded upside volume and now shares of POZN are quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in POZN if it manages to break out above some near-term overhead resistance at $5.15 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 236,000 shares. If that breakout triggers soon, then POZN will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $5.66 to its 200-day moving average at $5.89 a share. Any high volume move above those key moving averages and then above $6.11 will put $6.50 into range for shares of POZN.

Traders can look to buy POZN off weakness to anticipate that breakout and simply use a stop just below some key near-term support levels at $4.65 to $4.55 a share. One can also buy off strength once POZN clears $5.15 with volume and then simply use a stop just below $4.65 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.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Madison, Wis., 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.