Stock Quotes in this Article: LDK, MTG, STP, TSL, DQ

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.

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Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Novatel Wireless (NVTL), which jumped higher by 13.5%; Himax Technologies (HIMX), which ripped higher by 11.2%; KiOR (KIOR), which spiked higher by 10.7%; and Affymetrix (AFFX), which trended up 9.6%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

One low-priced stock that recently ripped higher was real estate investment trust Strategic Hotels & Resorts (BEE), which I highlighted in May 16's "5 Stocks Under $10 Set to Soar" at $8.24 a share. I mentioned in that piece that shares of BEE were just starting to trend back above its 50-day moving average with heavy upside volume flows. That move was starting to push shares of BEE within range of triggering a major breakout trade above some near-term overhead resistance levels at $8.30 to $8.56 a share.

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Guess what happened? Shares of BEE pulled back after my piece to its recent low of $7.63 a share, which was right below some near-term key near-term support levels. I always tell traders to use stops that sit just below near-term support levels because often times the market will run other people's stops that sit right on support. I prefer to use mental stops, because it doesn't make much sense to show the market your hand. Shares of BEE hit that $7.63 low on June 13 and ran some stops, and then the stock exploded higher and triggered that breakout. This stock broke out and ripped higher from $7.63 to $9.69 a share, which represents a gain of close to 30% for anyone who played the breakout.

Shares of BEE broke out that day due to a report that the company might put itself up for sale. Reuters reported that the company hired brokerage Eastdil Secured to help explore selling the firm. I would keep an eye on this stock for another breakout trade if it manages to clear $9.25 to its 52-week high at $9.69 with high volume.

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.

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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.

Suntech Power

One under-$10 stock that looks poised to trigger a major breakout trade is Suntech Power (STP), which is a solar energy company, which designs, develops, manufactures and markets a number of PV cells and modules. This stock has been hit hard by the bears so far in 2013, with shares down by 30%.

If you take a look at the chart for Suntech Power, you'll notice that this stock is just starting to flirt with some near-term overhead resistance at $1.07 a share. You'll also notice that shares of STP have formed a triple bottom over the last month, with the stock finding buying interest at 86 cents, 89 cents and 93 cents per share. That triple bottom zone is now a major base for STP to launch from with the stock starting to flirt with a major breakout trade.

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Traders should now look for long-biased trades in STP if it manages to break out above some near-term overhead resistance levels at $1.18 to $1.28 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 5.51 million shares. If that breakout triggers soon, then STP will set up to re-test or possibly take out its next major overhead resistance levels at $1.70 to $1.78 a share. Any high-volume move above those levels will then give STP a chance to tag its next major overhead resistance levels at $2 to $2.15 a share.

Traders can look to buy STP off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at 84 cents per share. One can also buy STP 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. Keep in mind that buying above $1.07 is also prudent since that's a key breakout level right before $1.18 to $1.28 a share.

This stock has big short-squeeze potential, since the current short interest as a percentage of the float for STP is very high at 14.12%. This breakout could be exactly what's needed to force the bears to cover some of their short positions, so make sure to keep this name on your trading radar.

Trina Solar

Another under-$10 stock that's trending within range of triggering a near-term breakout trade is Trina Solar (TSL), which is mainly engaged in the manufacturing and selling of solar modules in the People's Republic of China and overseas. This stock is off to a hot start in 2013, with shares up sharply by 36%.

If you take a look at the chart for Trina Solar, you'll notice that this stock has pulled back in the last month, with the stock dropping from its high of $8.47 a share to its recent low of $5 a share. During that move, shares of TSL have been most making lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to bounce off that $5 low and has recaptured its 50-day moving average at $5.50 a share. That bounce is quickly pushing shares of TSL within range of triggering a near-term breakout trade.

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Market players should now look for long-biased trades in TSL if it manages to break out above some near-term overhead resistance levels at $6 to $6.40 a share and then above more resistance at $6.93 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 4.18 million shares. If that breakout triggers soon, then TSL will set up to re-test or possibly take out its next major overhead resistance levels at $7.50 to its 52-week high at $8.47 a share. Any high-volume move above $8.47 will then give TSL a chance to trend north towards $10 a share.

Traders can look to buy TSL off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $5.50 a share, or right around more support at $5 a share. One can also buy TSL 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 TSL is very high at 16.15%. We could easily see a sharp short-covering rally if that breakout triggers soon, so make sure to keep this name on watch.

MGIC Investment

One under-$10 name that's starting to push within range of triggering a major breakout trade is MGIC Investment (MTG), which is a provider of private mortgage insurance in the U.S. This stock has been in beast mode in 2013, with shares up 134%.

If you take a look at the chart for MGIC Investment, you'll notice that this stock has been trending sideways for the last two months, with shares trading between $6.60 on the upside and $5.51 on the downside. During that timeframe, MTG has run into major resistance six times when it's traded higher near $6.45 to $6.60 a share. This stock has just started to bounce off its 50-day moving average at $5.84 a share and is now quickly moving within range of breaking out above that major resistance zone. Since that zone has held buyers back for over two months, a breakout above it with volume would be a significant technical development.

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Traders should now look for long-biased trades in MTG if it manages to break out above some near-term overhead resistance levels at $6.55 to $6.60 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 12.96 million shares. If that breakout triggers soon, then MTG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $9 to $10 a share.

Traders can look to buy MTG off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $5.84 to $5.51 a share. One can also buy MTG 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.

LDK Solar

Another under-$10 name that's starting to move within range of triggering a major breakout trade is LDK Solar (LDK), which sells multicrystalline and monocrystalline wafers globally to manufacturers of solar cells and modules. This stock hasn't done much so far in 2013, with shares off by 4.5%.

If you take a look at the chart for LDK Solar, you'll notice that this stock has been downtrending badly for the last month and change, with shares dropping from its high of $2.17 to its recent low of $1.23 a share. During that downtrend, shares of LDK have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LDK have just started to trend back above its 200-day moving average at $1.34 and its testing its 50-day moving average at $1.41 a share. That move is setting up LDK to potentially break out above a key downtrend line.

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Market players should now look for long-biased trades in LDK if it manages to break out above some near-term overhead resistance levels at $1.41 to $1.51 a share and then once it clears more resistance at $1.65 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 2.06 million shares. If that breakout triggers soon, then LDK will set up to re-test or possibly take out its next major overhead resistance levels at $2 to $2.17 a share. Any high-volume move above those levels will then give LDK a chance to take out its 52-week high at $2.32 a share.

Traders can look to buy LDK off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.23 to $1.20 a share. One can also buy LDK 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.

Daqo New Energy

One more under-$10 name that looks ready to trigger a near-term breakout trade is Daqo New Energy (DQ), which is polysilicon manufacturer based in China. This stock is off to a decent start in 2013, with shares up by 18%.

If you take a look at the chart for Daqo New Energy, you'll notice that this stock has been uptrending strong for the last month, with shares moving higher from its low of $6.37 to its recent high of $10.24 a share. During that uptrend, shares of DQ have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of DQ within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in DQ if it manages to break out above some near-term overhead resistance levels at $10.24 to $10.66 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 67,922 shares. If that breakout triggers soon, then DQ will set up to re-test or possibly take out its next major overhead resistance levels at $12 to $13 a share. Any high-volume move above those levels will then put $14 to $15 within range for shares of DQ.

Traders can look to buy DQ off weakness to anticipate that breakout and simply use a stop that sits right below $8.50 a share, or below $8 a share. One can also buy DQ 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.

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.