Stock Quotes in this Article: MELA, RBCN, SCMP, ENPH, ATRS

 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 Noranda Aluminum (NOR), which skyrocketed higher by 34.8%; FX Energy (FXEN), which ripped higher by 27%; Real Goods Solar (RSOL), which surged by 16.7%; and Cimatron (CIMT), which spiked to the upside by 16.4%. 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 exploded to the upside was biotechnology and drugs player Sucampo Pharmaceuticals (SCMP), which I highlighted in March 14's “5 Stocks Under $10 Triggering Breakouts” at around $5 a share. I mentioned in that piece that shares of SCMP hit recently hit $4.55 a share which was very close to some previous support levels at $4.51 to $4.54 a share. That marked a major bottom for SCMP and the stock was now starting to challenge both its 50-day at $5.14 a share and its 200-day at $5.20 a share. That move was quickly pushing shares of SCMP within range of triggering a near-term breakout trade above some overhead resistance levels at $5.42 to $5.53 a share.

Guess what happened? Shares of SCMP went on to trigger that breakout trade with decent volume just a few trading sessions later, and the stock hasn’t looked back since. This biotech player quickly hit $7 a share by mid-April and then the monster move came this week. Shares of SCMP broke out again above $7 a share on Tuesday with massive upside volume. The stock hit a new 52-week high on Wednesday at $10.18 a share and volume again was off the charts. That represents a 100% gain for anyone who played the breakout in just about a month! This stock is the perfect example of how playing breakouts can lead to massive profits in a very short timeframe.

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.

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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.

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Antares Pharma

One under-$10 stock that’s trending very close to trigger a near-term breakout trade is Antares Pharma (ATRS), which is a specialty pharmaceutical company developing and commercializing self-administered parenteral pharmaceutical products and technologies and topical gel-based products. This stock has been moving higher in 2013, with shares up by 12.4%.

If you take a look at the chart for Antares Pharma, you’ll notice that this stock is bouncing sharply to the upside today right off its 50-day moving average of $3.53 a share. This move has started to push shares of ATRS above a key downtrend line that has been acting as resistance for the stock since February. Shares of ATRS are also starting to break out above some near-term overhead resistance at $3.63 to $3.71 a share. That move is quickly pushing the stock within range of triggering another major breakout trade.

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Traders should now look for long-biased trades in ATRS if it manages to break out above some near-term overhead resistance levels at $3.71 to $3.80 a share and then once it clears more resistance at its 200-day at $3.94 and at $4 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 885,916 shares. If that breakout triggers soon, then ATRS will set up to re-test or possibly take out its next major overhead resistance levels at $4.38 to $4.73 a share. Any high-volume move above $4.73 will then put $5.25 to $5.50 into range for shares of ATRS.

Traders can look to buy ATRS off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day at $3.53 a share. One can also buy off strength once ATRS off strength once it takes out those breakout levels with volume and then simply use a stop just below $3.63 a share.

This stock has a decent amount of bears involved in the name, since the current short interest as a percentage of the float for ATRS is pretty high at 9.8%. We could easily see this stock short-squeeze rapidly higher from current levels if the price action remains bullish.

Security National Financial

Another under-$10 stock that’s quickly moving within range of triggering a near-term breakout trade is Security National Financial (SNFCA), which operate in three business segments: life insurance, cemetery and mortuary services and mortgage loans. This stock has been under a bit of pressure in 2013, with shares off by 9.8%.

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If you take a look at the chart for Security National Financial, you’ll notice that this stock recently formed a double bottom chart pattern at $6.55 to $6.60 a share. Shares of SNFCA have now also started to bounce right off its 200-day moving average of $6.60 a share with decent upside volume. This move is quickly pushing the stock within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in SNFCA if it manages to break out above some near-term overhead resistance levels at $7.63 to its 50-day at $8.06 a share and then once it takes out more resistance at $8.41 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 301,406 shares. If that breakout hits soon, then SNFCA will set up to re-test or possibly take out its next major overhead resistance level at $9.42 a share. Any high-volume move above $9.42 would then put $12 to $13 into range for shares of SNFCA.

Traders can look to buy SNFCA off weakness to anticipate that breakout and simply use a stop that sits just below its 200-day at $6.60 a share. One can also buy SNFCA off strength once it takes out those breakout levels with volume and then simply use a stop just below $7 a share. I would add to either position once SNFCA takes out resistance at $8.41 to $9.42 with heavy upside volume.

This is a heavily-shorted stock, since the current short interest as a percentage of the float for SNFCA is 15.2%. Any bullish price action that pushes this stock into breakout territory could easily spark a monster short-squeeze, so make sure to have this name on your breakout trading radar.

Enphase Energy

One under-$10 name that’s trading within range of triggering a major breakout trade is Enphase Energy (ENPH), which has pioneered a new inverter technology for the solar industry that increases energy production, simplifies design and installation, improves system uptime and reliability, and reduces fire safety risk. This stock has been on fire so far in 2013, with shares up sharply by 73%.

If you take a look at the chart for Enphase Energy, you’ll notice that this stock has been uptrending strong for the last six months, with shares soaring higher from its low of $1.92 to its recent high of $6.70 a share. During that uptrend, shares of ENPH have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ENPH within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in ENPH if it manages to break out above some near-term overhead resistance levels at $6.36 to $6.70 a share and then above some past resistance at $6.89 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 281,685 shares. If that breakout triggers soon, then ENPH will set up to re-test or possibly take out its next major overhead resistance levels at $7.35 to $8.50 a share.

Traders can look to buy ENPH off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $5.58 a share. One can also buy ENPH off strength once it clears those breakout levels with volume and then simply use a stop right below $6 a share.

This is another stock the bears love, since the current short interest as a percentage of the float for ENPH is pretty high at 10.1%. A solid short-covering rally could develop if ENPH breaks out soon, so make sure to have this name on your watch list.

Rubicon Technology

Another under-$10 name that’s quickly moving within range of triggering a major breakout trade is Rubicon Technology (RBCN), an electronic materials provider that develops, manufactures and sells monocrystalline sapphire and other innovative crystalline products for LEDs, RFICs, blue laser diodes, optoelectronics and other optical applications. This stock is off to a hot start in 2013, with shares up by 22%.

If you take a look at the chart for Rubicon Technology, you’ll notice that this stock has recently started to rebound off its 50-day moving average of $6.04 a share with heavy upside volume flows. That rebound has now started to push RBCN back above its 200-day moving average of $7.60 a share and above some a key near-term breakout level at $7.62 a share. At last check, RBCN has hit an intraday high of $7.70 a share and volume is well above is three-month average action of 381,737 shares.

Market players should now look for long-biased trades in RBCN as long as it’s trending above those key breakout levels of $7.60 to $7.62 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 381,737 shares. If RBCN can maintain that trend, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $8.50 to $9.50 a share. Any high-volume move above $9.50 will then put $10 to $10.80 into focus for shares of RBCN.

Traders can look to buy RBCN off weakness to anticipate that breakout and simply use a stop that sits just below $7 a share. One can also buy RBCN off strength once it clears those breakout levels with volume and then simply use the same stop below $7 a share.

This stock is a favorite target of the short-sellers, since the current short interest as a percentage of the float for RBCN is extremely high at 23.9%. This stock has monster short-squeeze potential if this breakout holds, so make sure to have this name on watch.

Mela Sciences

One more under-$10 stock that’s quickly moving within range of triggering a major breakout trade is Mela Sciences (MELA), a medical device company engaged in designing and development of a non-invasive, point-of-care instrument to assist in the early diagnosis of melanoma. This stock has been hit hard by the sellers so far in 2013, with shares off by 30%.

If you take a look at the chart for MELA Sciences, you’ll notice that this stock has been trending inside of a consolidation pattern for the last two months, with shares moving between $1.08 on the downside and $1.27 on the upside. Shares of MELA recently started to bounce off $1.10 a share and it’s now quickly moving within range of triggering a major breakout trade above the upper end of its recent range.

Traders should now look for long-biased trades in MELA if it manages to break out above some near-term overhead resistance levels at $1.25 to its 50-day moving average at $1.27 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 478,303 shares. If that breakout triggers soon, then MELA will set up to re-test or possibly take out its next major overhead resistance levels at $1.60 to $1.75 a share. Any high-volume move above those levels will then put $1.83 to $2, or even $2.20 into range for shares of MELA.

Traders can look to buy MELA off weakness to anticipate that breakout and simply use a stop just below some key near-term support levels at 1.10 to $1.08 a share. One can also buy off strength once MELA clears those breakout levels with volume and then simply use a stop just below $1.15 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 Madison, Wis.

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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.