Stock Quotes in this Article: DCTH, LEAP, NBG, MTOR, SUPN

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 Ceres (CERE), which skyrocketed higher by 77.2%; China Ming Yang Wind Power Group (MY), which ripped higher by 10.2%; Pixelworks (PXLW), which trended up by 8.4%; and National Bank of Greece (NBG), which spiked higher by 8.7%. 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 soared higher was specialty pharmaceutical player Supernus Pharmaceuticals (SUPN), which I highlighted in May 17's "5 Stocks Setting Up to Break Out" at $5.85 a share. I mentioned then that SUPN has been uptrending strong for the last month, with shares consistently making higher lows and higher highs, which was bullish price action. That move had spiked SUPN back above its 50-day moving average, and it was quickly pushing the stock within range of triggering a major breakout trade. That breakout was set to trigger if SUPN managed to clear some near-term overhead resistance levels at $5.68 to $6.29 a share with high volume.

Guess what happened? Shares of SUPN didn't wait long to trigger that breakout, since the stock took out those key resistance levels the following week with bullish upside volume flows. This stock continued to uptrend strong and the stock recently hit a high of $7.20 a share. That represents a gain of over 20% for anyone who jumped on this breakout play. The next big breakout trade for SUPN will now trigger if it clears $7.20 with solid volume. That move will set up SUPN to re-test or possibly take out its next major overhead resistance levels at $8 to its 200-day at $8.40 a share. Above $8.40 is a massive gap that started at $11 a share that could get filled, so I would continue to monitor this stock going forward.

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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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Leap Wireless

One under-$10 stock that's starting to move within range of triggering a near-term breakout trade is Leap Wireless (LEAP), a wireless communications carrier that offers digital wireless services in the U.S. under the Cricket brand. This stock has been trending lower in 2013, with shares off by 11%.

If you take a look at the chart for Leap Wireless, you'll notice that this stock has been trending sideways and consolidating for the last two months, with shares moving between $5.31 on the downside and $6.28 on the upside. Shares of LEAP have just started to trend back above its 50-day moving average at $5.81 a share. That move is quickly pushing the stock within range of triggering a near-term breakout trade above the upper-end of its recent range.

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Traders should now look for long-biased trades in LEAP if it manages to break out above its 200-day moving average at $5.98 a share and then once it clears more resistance levels at $6.25 to $6.28 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 1.17 million shares. If that breakout triggers soon, then LEAP will set up to re-test or possibly take out its next major overhead resistance levels at $6.75 to $7.18 a share. Any high-volume move above those levels will then put its nest major overhead resistance levels at $8 to $9 into range for shares of LEAP.

Traders can look to buy LEAP off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $5.45 to $5.31 a share. One can also buy LEAP off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This stock is very popular among the bears, since the current short interest as a percentage of the float for LEAP is very high at $20%. This sets up LEAP for a large short-squeeze if it breaks out soon, so make sure to keep this name on your low-priced stock radar.

National Bank of Greece

Another under-$10 stock that's trending within range of triggering a major breakout trade is National Bank of Greece (NBG), which is engaged in providing financial services that include retail and commercial banking, global investment management, investment banking, insurance, investment activities and securities trading. This stock has been hammered by the sellers so far in 2013, with shares off big by 68%.

If you take a look at the chart for National Bank of Greece, you'll see that this stock has just started to rebound off its 52-week low at $5.03 a share with strong upside volume flows. This rebound is also coming off oversold territory, since its current relative strength index reading is 36. Oversold can always get more oversold, but it can also be an area where a stock experiences a powerful bounce higher from. As shares of NBG begin to bounce off that $5.03 low the stock is also quickly moving within range of triggering a major breakout trade.

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Market players should now look for long-biased trades in NBG if it manages to break out above some near-term overhead resistance at $6.21 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 1.64 million shares. If that breakout triggers soon, then NBG will set up to re-test or possibly take out its next major overhead resistance levels at $9.20 to its 50-day moving average at $9.69 a share.

Traders can look to buy NBG off any weakness to anticipate that breakout and simply use a stop that sits right below its 52-week low of $5.03 a share. One can also buy NBG off strength once it clears $6.21 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Media General

One under-$10 name that's quickly moving within range of triggering a major breakout trade is Media General (MEG), a provider of news, information and entertainment across 18 network-affiliated television stations, digital media and mobile platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern U.S. This stock has been on fire so far in 2013, with shares up sharply by 115%.

Just last week, Media General announced a merger with privately-held Young Broadcasting and Warren Buffett's Berkshire Hathaway said it will hold 5.3% of the new Media General combined company.

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If you take a look at the chart for Media General, you'll notice that this stock just recently pulled back off its recent high of $9.95 to $8.60 a share on lighter volume. I say "lighter volume" because shares of MEG saw a super-spike higher last week off the merger news from $7 to $9.95 a share on monster upside volume. So far this pullback has seen MEG hold above its 50-day moving average at $8.39 a share. This stock is now quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in MEG if it manages to break out above some near-term overhead resistance levels at $9.95 to its 52-week high at $10.17 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 214,905 shares. If that breakout triggers soon, then MEG will set up to enter new 52-week high territory above $10.17, which is bullish technical price action. Some possible upside targets off that breakout are $13 to $15 a share, or possibly even north of $15 a share.

Traders can look to buy MEG off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $8.60 a share, or just below its 50-day at $8.39 a share. One can also buy MEG off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This stock is a popular target of the short-sellers, since the current short interest as a percentage of the float for MEG is very high at 15.6%. We could easily see a big short-squeeze if MEG triggers that breakout soon, so make sure to keep this name on your low-priced stock trading radar.

Meritor

Another under-$10 name that's starting to move within range of triggering a near-term breakout trade is Meritor (MTOR), which is engaged in the supply of a range of integrated systems, modules and components to original equipment manufacturers and the aftermarket for commercial vehicle, transportation and industrial sectors. This stock is off to a strong start in 2013, with shares up 50%.

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If you take a look at the chart for Meritor, you'll notice that this stock has been trending sideways inside of a consolidation pattern for the last month, with shares moving between $6.70 on the downside and $7.50 on the upside. Shares of MTOR are now starting to trend higher above that $6.70 low, and it's quickly moving within distance of triggering a near-term breakout trade above the upper-end of its recent sideways chart pattern.

Market players should now look for long-biased trades in MTOR if it manages to break out above some near-term overhead resistance levels at $7.25 to $7.50 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 1.49 million shares. If that breakout triggers soon, then MTOR will set up to enter new 52-week high territory above $7.50, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $8.74 to $10.31 a share. Any high-volume move above $10.31 a share could then send shares of MTOR towards $12.

Traders can look to buy MTOR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $6.70 to $6.25 a share. One can also buy MTOR off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Delcath Systems

One final under-$10 name that looks ready to trigger a major breakout trade is Delcath Systems (DCTH), a pharmaceutical and medical device company that focuses on the treatment of primary and metastatic liver cancers. This stock has been crushed by the bears so far in 2013, with shares off by 63%.

If you take a look at the chart for Delcath Systems, you'll notice that this stock gapped down sharply in late April and early May from over $1.40 to its recent low of 38 cents per share with heavy downside volume. Following that move, shares of DCTH have been trending sideways inside of a consolidation chart pattern, with shares moving between 38 cents on the downside and 50 cents on the upside. Shares of DCTH are now starting to move within range of triggering a major breakout trade above the upper-end of its recent sideways chart pattern.

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It's worth noting that shares of DCTH are also just starting to trade higher off oversold levels, since its relative strength index was recently trending well below 30. Oversold can always get more oversold, but it can also be an area where a stock rebounds sharply higher from as buyers come in to play the bounce.

Traders should now look for long-biased trades in DCTH if it manages to break out above some near-term overhead resistance at 47 cents to 50 cents per 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 1.14 million shares. If that breakout hits soon, then DTCH will set up for a potentially powerful move higher into its previous gap down zone. Some possible upside targets if we get into that gap with volume are 80 cents or even north of $1 a share.

Traders can look to buy DCTH off weakness to anticipate that breakout and simply use a stop that sits right around 40 to 38 cents per share. One can also buy DTCH off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point. Since this is a penny stock that trades under $1 a share, it might be best to go long only off strength that's accompanied by strong volume.

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.