Stock Quotes in this Article: BSDM, OCLR, CLIR, EMRK, IRDA

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 MediciNova (MNOV), which skyrocketed higher by 31.1%; Interphase (INPH), which ripped higher by 24%; Lee Enterprises (LEE), which spiked higher by 20.6%; and Oxygen Biotherapeutics (OXBT), which jumped up by 15.2%. 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 ripped higher was biotherapeutic player pSivida (PSDV), which I highlighted in May 2's "5 Stocks Under $10 Set to Surge" at $2.50 a share. I mentioned in that piece that shares of PSDV were trending sideways inside of in a consolidation chart pattern for the previous two months, with the stock moving between $1.95 on the downside and $2.50 on the upside. The stock was just starting to bounce off its 50-day moving average and was quickly moving within range of triggering a major breakout trade above the upper-end of its recent sideways chart pattern.

Guess what happened? Shares of PSDV went on to trigger that breakout in the following week with strong upside volume flows. This stock never looked back once it broke out above some key overhead resistance levels at $2.50 to $2.58 a share. Shares of PSDV have been uptrending strong since it triggered that breakout, with the stock moving from around $2.50 to its new 52-week high at $4.03 a share. That represents a gain of 60% in a very short timeframe for anyone who bought the breakout. The best part about this move is that PSDV uptrended beautifully after trigger that breakout, with the stock consistently making higher lows and higher highs.

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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.

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

BSD Medical

One under-$10 stock that's starting to move within range of triggering a major breakout trade is BSD Medical (BSDM), which develops, manufactures, markets and services medical systems that deliver precision-focused radio frequency or microwave energy into diseased sites of the body, heating them to temperatures as required by medical therapies. This stock has been trending lower in 2013, with shares off by 11%.

If you take a look at the chart for BSD Medical, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of 97 cents per share to its recent high of $1.38 a share. During that uptrend, shares of BSDM have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BSDM within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in BSDM if it manages to break out above some near-term overhead resistance levels at $1.38 to its 200-day moving average at $1.46 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 volume of 296,348 shares. If that breakout triggers soon, then BSDM will set up to re-fill its previous gap down zone from April that started at $1.87 a share. Any high-volume move above $1.87 will then put its next major overhead resistance levels at $2.05 to $2.34 within range for shares of BSDM.

Traders can look to buy BSDM off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $1.20 a share. One can also buy BSDM 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.

Oclaro

Another under-$10 stock that's trending within range of triggering a near-term breakout trade is Oclaro (OCLR), which provides high-performance core optical network components, modules and subsystems to global telecommunications equipment manufacturers. This stock has been moving higher modestly so far in 2013, with shares up 9.7%.

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If you take a look at the chart for Oclaro, you'll notice that this stock has been uptrending strong for the last few weeks, with shares moving higher from its low of $1.01 to its intraday high of $1.30 a share. During that uptrend, shares of OCLR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of OCLR within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in OCLR if it manages to break out above some near-term overhead resistance levels at $1.28 to $1.42 a share and then once it clears more resistance levels at $1.52 to $1.54 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 917,006 shares. If that breakout triggers soon, then OCLR will set up to re-test or possibly take out its next major overhead resistance levels at $1.75 to $1.95 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at $2.11 to $2.60 into range for shares of OCLR.

Traders can look to buy OCLR off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $1.16 a share. One can also buy OCLR 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 favorite target of the short-sellers, since the current short interest as a percentage of the float for OCLR is very high at 16%. The bears have also been increasing their bets from the last reporting period by 7%, or by about 803,000 shares. If the bears get caught pressing their bets into a technical breakout, then shares of OCLR could easily soar significantly higher as they rush to cover some of their short positions.

Clearsign Combustion

One under-$10 name that's quickly moving within range of triggering a near-term breakout trade is Clearsign Combustion (CLIR), which designs, develops and markets technologies that aim to improve key performance characteristics of combustion systems including energy efficiency, emissions control, fuel flexibility and overall cost effectiveness. This stock has been on fire so far in 2013, with shares up big by 76%.

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If you take a look at the chart for Clearsign Combustion, you'll notice that this stock has been uptrending strong since it recently found buying interest near its 200-day moving average, with the stock moving higher from $6.35 to $9.25 a share. During that move, shares of CLIR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CLIR back above its 50-day moving average at $8.54 a share and it's quickly moving the stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in CLIR if it manages to break out above some near-term overhead resistance levels at $9 to $9.25 a share and then once it takes out more key resistance at $10.09 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 119,464 shares. If that breakout triggers soon, then CLIR will set up to re-test or possibly take out its all-time high at $11.21 a share. Any high-volume move above its all-time high at $11.21 a share could then send shares of CLIR well north of $12 a share.

Traders can look to buy CLIR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $8.30 a share, or just below $7.50 a share. One can also buy CLIR 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.

Idera Pharmaceuticals

Another under-$10 name that's starting to move within range of triggering a major breakout trade is Idera Pharmaceuticals (IDRA), which is a clinical stage biotechnology company engaged in the discovery and development of novel synthetic DNA- and RNA- based drug candidates. This stock is off to a weak start in 2013, with shares down by 16.4%.

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If you take a look at the chart for Idera Pharmaceuticals, you'll notice that this stock has been trading in a tight consolidation chart pattern for the last month and change, with shares moving between 60 cents on the downside and 83 cents on the upside. IDRA has just started to bounce right off its 50-day moving average of 68 cents per share and is now quickly moving within range of triggering a major breakout trade above the upper-end of its recent range.

Market players should now look for long-biased trades in IDRA if it manages to break out above some near-term overhead resistance levels at its 200-day moving average of 76 cents per share and then once it clears more key resistance levels at 82 cents to 83 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 201,139 shares. If that breakout triggers soon, then IRDA will set up to re-test or possibly take out its next major overhead resistance levels at $1.15 to $1.22 a share. Any high-volume move above those levels could then send IDRA towards $1.50 to $1.60 a share.

Traders can look to buy IDRA off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at 68 cents per share or around some more key support areas at 66 cents to 59 cents per share. One can also buy IDRA 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.

Emcore

One more under-$10 name that looks ready to trigger a near-term breakout trade is Emcore (EMKR), a provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite and terrestrial solar power markets. This stock is off to slow start in 2013, with shares off by 11.6%.

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If you take a look at the chart for Emcore, you'll notice that this stock just recently formed a double bottom chart pattern at $3.32 to $3.34 a share. Following that bottom, shares of EMKR have started to uptrend, with the stock moving higher from $3.34 to its recent high of $3.85 a share. During that move, shares of EMKR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of EMKR within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in EMKR if it manages to break out above some near-term overhead resistance levels at $3.85 to its 50-day moving average of $3.98 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 285,400 shares. If that breakout triggers soon, then EMKR will set up to re-test or possibly take out its next major overhead resistance levels at $4.24 to $4.36 a share. Any high-volume move above those levels will then give EMKR a chance to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $4.89 a share to $4.92 to $5.25 a share.

Traders can look to buy EMKR off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $3.55 to $3.32 a share. One can also buy EMKR 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. I would add to either position if EMKR takes out $4.24 to $4.36 a share with high 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.