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- 3 Biotech Stocks Spiking on Big Volume
5 Stocks Under $10 Set to Soar - views
WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street when certain 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 today in the under-$10 complex, including Imperial Sugar (IPSU), exploding higher by nearly 70%; Cyanotech (CYAN), ripping over 35%; Tegal (TGAL), soaring 22%; and Premier West Bancorp (PRWT) trading up 15%. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
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.
Here ‘s a look at a several under-$10 stocks that look poised to potentially trade higher from current levels.
One under-$10 stock that’s starting to trigger a big breakout trade today is semiconductor player Canadian Solar (CSIQ). This company designs, develops, manufactures and sells solar cell and solar module products that convert sunlight into electricity for a variety of uses. This stock has been a monster for the bulls, with shares up over 69% so far in 2012.
If you take a look at the chart for Canadian Solar, you’ll see that this stock was stuck in a nasty downtrend until it hit a recent low of $2.07 a share. After printing that low, the stock completely reversed its downtrend and started to uptrend strong. That uptrend was identifiable once the stock started to make higher lows and higher highs on a consistent basis. The stock also gave a hint that the sellers were done once the upside volume days started to show dramatic activity.
Now shares of CSIQ are starting to trigger a near-term breakout trade with the stock starting to move above $4.24 with monster volume. At last check, CSIQ has cleared $4.24 and the volume is very strong. Volume today is already above 2.5 million shares, which is well above its three-month average action of 1.06 million shares. Market players should watch for a sustained high-volume move and close over $4.24 to signal that this stock wants to trend much higher.
If you’re bullish on CSIQ, I would look to buy the stock off any weakness as long as it continues to trend above $4.24 a share. I would simply use a mental stop maybe a few percentage points below $4.24 in case this breakout fails. Target a run back towards $5 to $5.97 (200-day), or possibly higher if CSIQ continues to uptrend strong and trend above that key breakout level.
Another under-$10 stock that’s trading within range of a major breakout is Comverge (COMV) is a clean energy company providing demand management solutions in the form of peaking and base load capacity to electric utilities, grid operators and associated electricity markets. This stock is off to a decent start in 2012, with shares up over 15%.
If you take a look at the chart for Comverge, you’ll notice that this stock was hammered by the sellers from its October high of $2.49 to a recent low of $1.03 a share. After tapping that low, the stock rebounded sharply and has now started to uptrend toward its current price of $1.47 a share. During that uptrend, shares of COMV have started to make higher lows and higher highs, which is bullish price action.
Traders should now watch COMV for a breakout trade to trigger once it can manage to sustain a high-volume move and close above some near-term overhead resistance at $1.59 with high-volume. Look for volume on a move above that level that registers near or well above its three-month average action of 194,311 shares. You can see on the chart that volume for the past two months has been tracking in extremely strong on the up days, which is bullish technical action.
If you’re bullish on COMV, I would look to buy into the recent weakness if the stock can hold above the uptrend line I drew in on the chart. That uptrend line sits right around the 20-day and 50-day moving averages. If the stock can hold above those levels at $1.32 (50-day) and $1.38 (20-day), then it should rebound and go for that breakout soon. If we get that action, then target a run towards $1.83 to $1.98 or possibly much higher.
I also featured Comverge in "5 Stocks With Big Insider Buying."
An under-$10 name in the semiconductor space that’s starting to break out today is China Sunergy (CSUN), which manufactures its solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect. This stock has been blazing a trail to the upside in 2012, with shares up over 85%.
If you take a look at the chart for China Sunergy, you’ll see that this is another stock that was stuck in a nasty downtrend for the past six months. Shares of CSUN dove from its September high of $4.56 to a recent low of $1.04 a share. After hitting that low, the stock has rebounded sharply on monster upside volume towards its current price of around $2.70 a share.
Market players should now look for more upside in CSUN with the stock triggering a breakout trade above some near-term overhead resistance at $2.50 a share. At last check, CSUN has taken that level out easily intraday and the volume has already hit 215,000 shares. The three-month average volume for CSUN is 68,652 shares. Traders should now watch for a sustained high-volume move and close over $2.50 to signal that CSUN wants to rip much higher.
One could be a buyer of CSUN off any weakness as long as it continues to trend above the breakout level of $2.50 a share. If that $2.50 level holds, and you happen to get long, then I would target a run back towards its next significant overhead resistance levels at $3 to $3.60 a share, or possibly its 200-day moving average at $4.20 a share.
China Sunergy shows up on a recent list of 10 Stocks Under $5 Outperforming in 2012.
Energy Conversion Devices
Another stock that’s trading very close to a key breakout level is Energy Conversion Devices (ENER), which manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using technology. This stock has put in an unbelievable run so far in 2012 with shares up over 550%.
If you take a look at the chart for Energy Conversion Devices, you’ll see that this stock formed a perfect double bottom in December at 20 cents per share. After finding big buying interest at 20 cents, the stock took off and skyrocketed to a recent high of $1.74 a share. The stock pulled back off that high and hit 94 cents, but since then it has started uptrending again and making higher lows and higher highs. Now ENER is trading within range of triggering a big near-term breakout.
If you’re bullish on ENER, then one could be a buyer of this stock once it breaks out above $1.37 on high-volume. Look for volume that’s near or well above its three-month average action of 2,581,936 shares. At last check, ENER has hit $1.38 at its highs today and the volume is monster with over 4.24 million shares traded. If we get a high-volume move and close above $1.37 either today or soon, then look for ENER to explode back towards $1.74 or potentially much higher. It could possibly hit $2.50 which is a big overhead resistance level from back in 2011.
If you get long ENER off weakness or strength, then I would simply use a mental stop at around $1.20 a share. If this stock is going to breakout and continue its strong uptrend, then I doubt $1.20 would get violated on the downside.
Energy Conversion Devices shows up on a recent list of Solar Stocks That May Not Survive to 2014.
One more under-$10 stock that’s getting very close to triggering a big breakout trade is Headwaters (HW), which provides products, technologies and services in the building products, construction materials and energy industries. This stock has been ripping higher in 2012 with shares up over 30% year-to-date.
If you take a look at the chart for Headwaters, you’ll notice that this stock has been trading range bound for the past couple of months and change between around $2 on the downside and $2.91 on the upside. Usually when a stock starts to move outside of a range it will being to trend for awhile in whatever direction it breaks out into. Right now, HW has started to trigger a big breakout above the upper-end of the range with shares moving above $2.87 to $2.91 with volume.
Market players should now watch for a sustained high-volume move and close above $2.91 to signal that HW wants to trend much higher. Look for volume that’s near or well above its three-month average action of 601,016 shares. At last check, volume today is already above 658,000 shares and the stock is trading at around $3 a share.
If you’re bullish on HW, look to buy this stock off of weakness and simply use a mental stop right around $2.80, or $2.91 if you want to keep it tighter. If this breakout is the real deal and HW continues to trend above $2.91, then target a spike higher back towards $3.38 a share. If $3.38 is then taken out with volume, look for HW to trade into the mid-$4s in the near future.
To see more hot under-$10 stocks, including Biodel (BIOD), Ascent Solar Technologies (ASTI) and ZST Digital Networks (ZSTN), check out the Stocks Under-$10 Setting Up To Trade Higher portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
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.